Lyft, the popular ride-hailing company, has reported a surge in riders but a decrease in revenue per active rider in the second quarter of 2023. To combat this situation, Lyft has made the decision to lower its fares in order to compete with Uber and attract a larger customer base.
The decrease in revenue per rider has been quite significant, with a nearly 5% decrease quarter-over-quarter. However, the number of active riders has seen a notable increase, growing to 21,487 in the second quarter compared to 19,552 in the previous quarter.
In an effort to make rides more affordable and appealing to riders, Lyft has set its sights on eliminating surge pricing, or “primetime.” This move is aimed at making Lyft’s pricing more transparent and predictable, as surge pricing is often seen as a demand suppressor and disliked by riders, according to Lyft’s CEO, David Risher.
Lyft’s driver supply has also seen a significant boost, reaching its highest level in three years. A spokesperson for the company stated that driver supply has increased by more than 20% year-over-year. Additionally, the average hours per active driver have reached a new high, surpassing the levels seen in 2019.
These factors have resulted in a considerable decrease in the share of rides affected by surge pricing. While this decision may lead to less revenue for Lyft in the short term, it is seen as a beneficial move for riders and the overall market.
Moreover, Lyft’s elimination of surge pricing might differentiate the company from its main competitor, Uber, at least in the short term. By presenting a more affordable and predictable pricing model, Lyft hopes to attract more riders and maintain a competitive edge in the ride-hailing industry.
Overall, the second quarter of 2023 has been an eventful period for Lyft, with a surge in riders, decreased revenue per rider, and strategic decisions made to eliminate surge pricing. Only time will tell whether these moves will pay off, but Lyft remains confident in its ability to provide affordable and reliable transportation options to its growing customer base.
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