• Costa Rica Real Estate

Uber Costa Rica drops fares 20 percent and some drivers aren’t happy

April 27, 2016

Uber Costa Rica announced a 20 percent drop in its fares Tuesday evening effective immediately, and some of its drivers are not happy about it.

Several chauffeurs complained to The Tico Times that the price gouge comes as many have been struggling to cover their expenses. But the ride-hailing company said that the fare drop would benefit drivers by spurring greater demand.

“In five and a half years, we’ve learned that the most effective way to stimulate demand is to reduce fares for passengers,” Uber wrote in a news release.

As of Tuesday evening, the base fare for a ride in the San José area fell from ₡1,000 to ₡800, and the cost per kilometer fell from ₡300 to ₡240. The company said that it would guarantee “minimums” during certain hours to “help drivers through the transition.” The company did not specify what those minimums would be.

The San Francisco-based company said similar reductions in other cities in the United States, Mexico and Colombia have improved demand, thus triggering an increase in the frequency of surge pricing, which multiplies the fare as demand rises, benefitting drivers and the company.

But part-time Uber driver Mario Delgado was wary of comparing those markets to Costa Rica. “That might have been the case in those other places, but Costa Rica is small,” he said, “In my opinion, I don’t think it’s going to work.”

Delgado said he isn’t too worried about the fare cut yet since he has other sources of income and health insurance provided by another job. But he said that he has seen his income from Uber drop in recent months. During one recent shift between 5 a.m. and 5 p.m., he said he made ₡10,000 — less than $20 — compared to the ₡30,000 — roughly $60 — that used to be typical for him during the same amount of time.

Delgado said he was worried about some drivers he knew who had leased a new vehicle specifically to work for Uber.

“They’re going to have to live in their car to make a living with Uber,” he said.

Another Uber driver, Carlos Brenes, agreed.

“I think it’s terrible,” said Brenes, who used to work in a bingo parlor until he was laid off three months ago. “There’s too many cars and not enough demand.”

Many drivers, like Brenes, have looked to the company as a stopgap after losing a job, while others drive full-time. Unemployment hovers around 10 percent in Costa Rica.

Several Uber drivers have told The Tico Times that competition for fares among the increasingly large pool of Uber drivers has made the service less lucrative. Uber has said it has “several thousand” registered drivers in Costa Rica.

“Everyone rushed in and now there’s not enough work to go around,” Brenes said.

The large pool of drivers is not a negative from Uber’s perspective. The company has said numerous times that its goal is to offer near immediate service to the app’s users.

But demand from riders has not kept pace with the jump in drivers since the service went online here in August 2015, prompting this week’s effort to get more people to use the service.

Taxis have so far been the main force protesting Uber in Costa Rica but it wouldn’t be unheard of for Uber drivers to demonstrate against the fare change. Uber drivers in Paris protested the same 20 percent fare cut in October 2015, according to the French newspaper L’Express.

No driver The Tico Times spoke with said they planned to leave the platform over the fare changes — yet.

“The way I see it,” Brenes said, “if the drivers don’t like it, they can leave.”

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