Uber passengers in well-off Melbourne suburbs and inner-city areas will be disproportionately slugged by higher fares from the ride-sharing giant after it upped prices in response to surging petrol costs for its drivers.
The $218 billion company has refused to say publicly how its price increases, which came into effect on Monday, will work, but emails seen by this masthead show it telling drivers they will go up by more in suburbs Richmond and Essendon.
Drivers had been furious that their income was stagnant while petrol costs at the bowser spiralled towards an average $2.50 per litre for unleaded, prompting the company to announce the changes last week.
Uber did not outline how much its customers’ fares would go up on Friday, instead saying it was overhauling its fee structure so it could pay its drivers more, amounting to an earnings increase of 6 per cent on average nationwide.
Unlike its rival Didi, which announced a temporary 5c per kilometre fuel levy last week that is passed onto drivers in full, Uber has said its fare increase will be permanent and that it responds to a broad range of increased costs beyond just rising fuel prices due to the war in the Middle East’s hampering of crude oil movement through the Strait of Hormuz.
However, this masthead can reveal the company’s new pricing strategy, which took effect on Monday, treats riders between Australian cities, and within different parts of those cities, differently, breaking with its long-term pricing model based broadly on a trip’s distance, time and surges in an area.
“Earn more in certain areas across Melbourne,” Uber wrote to drivers on Friday, in emails seen by this masthead. “We know the cost of driving has increased and understand the pressure many of you have been under, particularly in recent weeks. This change is part of a broader shift designed to help improve earnings.”
It did not respond to questions about whether customers’ fares would increase by more than the 6 per cent it is passing on to drivers on average, or if its new national fare regime – the first since 2023 – boosted the company’s bottom line as well as drivers’ pay.
In Melbourne, customer fares have risen by an average of 6 per cent for Uber X, XL, Comfort, Electric Assist and Pet services, according to the Uber emails.
Trips that begin in Melbourne’s CBD will deliver greater earnings for drivers.
Richmond, Port Melbourne and Essendon were also highlighted by Uber as examples of pick-up locations where customers’ fare increases will be higher.
Minimum fares will also be increased to $11.50 in Melbourne.
Across the country, peak periods that pay drivers higher fares, such as weekends, morning commute hours and late nights on weekdays, will also be expanded, incentivising Uber’s driver-partners – who are not classified as employees and who cannot be ordered to work at the busiest times – to clock on at those times.
Shorter trips will also attract higher fares across the board. This follows years of complaints from customers that drivers would reject short trips in the hopes of the algorithm assigning them longer distance, and thus higher revenue fares under Uber’s previous pricing structure.
There will be no price decrease for any fares as part of Uber’s pricing change. Affluent parts of Sydney are also being targeted with higher fares than the rest of the city.
Uber did not respond to questions about the specifics of its new pricing structure, instead pointing to the comments it made when announcing the broad increase on Friday.
“We regularly review our fares to ensure we’re striking the right balance between supporting strong earning opportunities for driver partners while continuing to offer reliable, affordable options for riders,” an Uber spokesperson said.
“These changes build on work already under way and reflect our ongoing commitment to better supporting driver earnings over time. We know operating costs, including fuel, remain front of mind for many driver partners, making continued support more important than ever,” the spokesperson said.
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Elias Visontay is a National Consumer Affairs Reporter at The Sydney Morning Herald and The Age.Connect via email.