Updated ,first published
Uber trips from CBDs and wealthy pockets of Sydney and Melbourne now cost as much as 39 per cent more than journeys of identical distance and duration booked in outer suburbs, under a new pricing model that disproportionately lifts prices in well-off areas.
Last Monday, the $218 billion company overhauled its fee structure so that it could pay drivers more, in what it said would amount to an earnings increase of 6 per cent, on average, nationwide. Unlike its rivals, which have introduced temporary levies to help drivers cope with soaring fuel costs, Uber’s fare increases are permanent.
Uber has refused to outline how much customer fares would rise, but this masthead last week reported the ride-share giant’s new pricing strategy treats riders within various parts of cities differently, breaking with its long-term model under which the main price variance was determined by surge multipliers to help attract drivers to areas with high demand.
Now, this masthead can reveal the exact fare structures and price ranges. They highlight how riders in inner-city and affluent suburbs face markedly more expensive trips, and significantly more price volatility (depending on what time of day they book), than Uber customers in areas such as outer western Sydney and the Mornington Peninsula, outside Melbourne.
Uber’s new pricing structure sets a range for trips across different parts of each city, comprised of a base rate similar to a flag fall fee, and per kilometre and per minute rates, all of which vary based on where a trip begins. Instead of specific amounts, each of these rates have set ranges, with a low and high end determined by the time of day of the trip and whether it falls in a peak period.
Surge pricing – a multiplier applied to an Uber fare that is activated at times of high demand for rides in a certain area to encourage drivers to rush there – will continue to apply on top of the new pricing regime.
New trip minimums of $11 in Sydney and $11.50 in Melbourne have also come into effect as part of the changes. The complex system makes for an opaque and puzzling fare scheme that will leave riders struggling to predict what their trip will cost.
Several Uber drivers who spoke to this masthead said they were also confused by the regime.
Sydney
In Sydney, Uber customers across the northern suburbs – a large area that stretches from the lower north shore and North Sydney CBD, north to Hornsby, and out to the Northern Beaches – now face the city’s most expensive Uber trips. During peak windows, trips from this area will start at $6.65 and be charged at $1.81 a kilometre and 65 cents a minute.
Prices are similarly high in Sydney’s eastern suburbs – an area taking in Paddington, down to Randwick and the south-eastern beaches, north to Bondi Beach and eastern suburbs around the south head of Sydney Harbour such as Vaucluse and Rose Bay – with fares during peak windows starting at $6.54 and charging $1.75 a kilometre and 66 cents a minute.
These prices are significantly more expensive than the upper limits in areas such as outer western Sydney, where, during peak windows, a trip starts at $3.59, with charges of $1.50 a kilometre and 42 cents a minute.
In a hypothetical 10km, 20-minute trip taken at the same peak time of the day, a customer whose trip starts in northern Sydney would be charged up to $37.75, while the same duration and distance would cost $26.99 from outer western Sydney. These prices don’t include Uber’s booking fee and the state government levy.
However, in non-peak windows, when the variable rates are at their lowest, the trip could cost as little as $21.48 in northern Sydney, but no less than $24.94 in outer wester Sydney, under a system that sets fares relatively consistently regardless of timing in parts of western Sydney but which introduces broad fare volatility in eastern and central parts of the city.
Fares are also substantially higher than average for trips from Sydney Airport. This comes amid a $60 flat taxi fare trial at the airport.
Melbourne
In Melbourne, Uber customers booking trips from the CBD and inner suburbs such as Richmond, Port Melbourne and Essendon, as well as airport bookings, have been hit with the largest fare increases.
In peak windows, trips from the CBD, Richmond, Port Melbourne and Essendon can start as high as $6.01, and charge $1.59 a kilometre and 43 cents a minute.
Across the rest of Melbourne, some areas have been stung with higher per kilometre rates, while others have higher per minute rates.
The discrepancies are illustrated through a hypothetical 10km, 20-minute trip taken at the same peak time of the day. Such a trip from inner Melbourne now costs up to $30.51, $28.73 in north-eastern suburbs such as Reservoir, Heidelberg and Epping, and $28.30 in northern suburbs such as Tullamarine, Broadmeadows and Craigieburn.
By comparison, trips with shorter durations but similar distances would leave riders in inner southern suburbs such as Caulfield and Bentleigh, and outer eastern suburbs such as Ringwood, Rowville and Croydon Hills, feeling the new fare increases more acutely.
Elias Visontay is a National Consumer Affairs Reporter at The Sydney Morning Herald and The Age.Connect via email.