Honolulu City Council Passes Cap on Surge Pricing

The controversial surge pricing practice temporarily increases fares during periods of high demand and low availability. Ride-hailing services say this gives drivers a financial incentive to put more cars on the road during these times to meet the increased demand. 

But the practice has fallen under strong criticism. Surge pricing was in full effect for Londoners attempting to escape the deadly terror attack at London Bridge last year until Uber manually deactivated it. Lyft increased prices 500 percent after last year's Super Bowl.

Taxi prices in Hawaii are among the highest in the U.S., with Uber and Lyft averaging 40 percent less expensive on standard pricing. But surge pricing can bite customers when they least expect it. U.S. Navy sailors getting off ships in Pearl Harbor recently were charged as much as $221 to get to Waikiki when a cab ride was $44.

The Uber and Lyft apps do indicate to customers when and where surge pricing is in effect. "Whenever we raise rates due to surge pricing, we let riders know in the app," according to Uber's web site. Some riders will choose to pay, while some will choose to wait a few minutes to see if the rates go back down to normal."

The measure now awaits signature by Mayor Kirk Caldwell, who may sign it into law, allow it to become law without his signature, or veto it. 

Uber has already emailed its customers on the Hawaiian island of Oahu urging them to oppose this measure that imposes "outdated taxi-style requirements on rideshare." This would be the first cap of its kind in the U.S. If passed, it could lead to other cities following Honolulu's lead.

In a separate statement, Uber says that the bill will limit consumer choice and put the availability of Uber service on Oahu at risk. 

This could foreshadow the withdrawal of ride-hailing services from the area entirely, as they did in Austin, Texas and other areas in the past when they felt that new laws regulating them were too restrictive.