Have you ever gotten the feeling that the Uber or Lyft pricing from some airports is ridiculously inflated? A ride to the airport might be $20 while the ride from the airport might be many times that…sometimes $100 or more.
Airport taxes, tolls, and other fees are certainly part of that, but the largest factor is that, in my locations, rideshare drivers collude to surge prices.
Here’s why these price surges happen and what you can do about it.
In this article…
Airport rides are expensive: Here’s why
Getting a rideshare ride from an airport is almost always more expensive than getting a ride to the airport. Airport taxes, transportation fees, parking fees for drivers, waiting fees… all of those get baked into the price of your rideshare ride. Even absent driver shenanigans to inflate prices, there is a baseline cost of operating transportation from an airport.
But at some airports, the largest reason rides from the airport are expensive has nothing to do with taxes imposed and everything to do with how drivers manipulate rideshare app pricing algorithms to surge pricing artificially.
Collusion: How drivers coordinate to surge prices
Commercial airports in the United States are highly regulated spaces.
In many cities, taxis and rideshare drivers are not allowed to accept rides unless they are waiting in a specific place on or near the airport grounds. Airport authorities enforce this on rideshare apps through geofencing. Unless a driver’s phone’s GPS shoes them sitting in the designated waiting lot, they can’t accept a ride request from someone whose phone is located on the airport grounds.
In theory, this has several advantages. It helps reduce traffic since hundreds of drivers are not circulating through pick-up lanes, waiting for a fare. It also provides reasonable wait times for pick-up services; when drivers are waiting in a lot that is 5 minutes away from the rideshare pickup location, you usually won’t need to wait more than 5 minutes to get a ride home.
In practice, by limiting the drivers eligible to accept airport pick up requests and placing them in the same physical location, airport authorities are creating an opportunity for drivers to collude to inflate prices.
How the collusion works
Uber, Lyft, and other rideshare services all implement some sort of surge pricing, where prices increase when there are relatively many riders compared to available drivers. This surge pricing is meant to maximize profit and encourage additional drivers to become available.
If all of the drivers shut off their phones, the pricing engines of rideshare apps see that there are few (or no) drivers available versus a relatively high number of potential riders, so they increase prices. This increases profits for the rideshare company and ensures that rides go to riders with the highest willingness to pay.
Because all of the rideshare drivers eligible to accept airport rides are concentrated in one physical location at some airports, they can coordinate shutting off their rideshare apps to goose surge pricing, then turn on their apps one at a time and accept rides at inflated prices.
This is a common practice worldwide.
Why it won’t stop: Rideshare companies love it
While rideshare companies will make public overtures about how drivers manipulating prices violates their terms of service and how they take violations very seriously, in reality they have very little incentive to stop this behavior.
The rideshare companies take a percentage of every fare they charge. Higher fares mean more profits for the rideshare companies. Demand for rides from airports is very inelastic… when you arrive at midnight at an airport, you want to get home or to your hotel and have a high willingness to pay. Drivers have figured out that they get paid more when they constrain the supply that is visible to the ridesharing apps.
Seen another way, some savvy drivers have been able to figure out how to capture consumer surplus that Uber and Lyft’s MBAs and engineers haven’t been able to capture.
One easy trick: Take public transport off airport grounds
I expect and accept paying a modest premium to take private transportation from the airport. Airport taxes and fees pay for facilities that I use and paying drivers an appropriate premium to ensure availability makes sense. But when prices are being manipulated to the point where I’m asked to pay a $100+ premium, I’ll take some steps to avoid getting ripped off.
Here’s what I do: I take public transport to one stop away from the airport and request my rideshare from there. Once I’m out of the airport’s geofence, my rideshare request can go to any driver in the area, which almost always means I’ll get a ride at a reasonable price. Plus, I’ll usually get into a car quicker than I would have at the airport! In most places, this is a reasonable solution that saves me a ton of money and doesn’t cost too much time.
Of course, this trick requires there to be public transit from an airport. But airports that have more restrictive regulations on rideshare drivers like requiring them to wait in a designated waiting lot tend to be in more left-leaning places… which also tend to be the places that invest in decent public transit.
Bottom line: You have options. Use them.
When airport surge pricing is out of control, consider taking public transit to a location off airport grounds and request your rideshare from there. Once you’re out of an airport’s geofence, your ride request can go to any driver in the area and you’re much more likely to see reasonable pricing.
