By Elisabeth Buchwald | MarketWatch
For the first time, Uber UBER, -1.60% is allowing drivers to have control over the fares they charge riders. But given the fierce competition across ride-hailing apps, industry experts say this could lead to a price-cutting battle between drivers vying for riders.
Uber said on Tuesday it is testing the feature at three California airports — Santa Barbara, Sacramento and Palm Springs. Drivers can charge more than the base fare Uber would otherwise charge riders, but only in multiples of 1.0 to 5 and in increments of 0.1.
Drivers will be allowed to set fares lower than the base fare starting next week.
“I don’t see anyone raising rates and getting rides,” said Jay Cradeur, founder of the Rideshare Dojo site and a driver for ride-hailing companies, including Uber and Lyft LYFT, -0.10% , in the Bay Area . “Even if there’s a price surge most drivers are going to go low because they know they’ll get more rides.”
Uber’s announcement comes after California enacted legislation in September aimed at reclassifying independent contractors, or “gig workers” such as drivers for Uber and Lyft, as employees.