With headlines dominated by recent minimum wage hikes forcing ridesharing companies out of cities, it is easy to forget the other regulation that ridesharing companies continue to be targeted with. Airports nationwide have been levying additional fees and American consumers are paying the price.
From Boston Logan International Airport in Massachusetts to John Wayne Airport in California, a large number of American airports (nearly all of which are government-owned) have increasingly decided to levy fees – specifically pick-up and drop-off fees – on ridesharing services. Airport officials argue these fees are necessary to fund infrastructure maintenance and reduce traffic congestion. Not only are these claims disingenuous, as the low elasticity of demand for ridesharing services suggests raising fees would not reduce traffic, but they also produce a wide range of unintended consequences for consumers, drivers, and the economy in general.
First, ridesharing fees distort market prices by adding additional charges to Uber and Lyft rides. While airports argue that these charges are relatively small, airport officials regularly increase them whenever they deem necessary. For instance, Lehigh Valley International Airport in Norristown, Pennsylvania recently voted to charge Uber and Lyft a $2.50 fee on every ride to and from the airport, up from $2.00 previously.
Ridesharing fees are also counterproductive for the gig economy workers who get less take-home pay as a result. For instance, Uber already keeps up to 25 percent of the profit generated from a ride and the driver receives whatever is left, after accounting for fees and vehicle wear and tear.
There are also serious doubts about whether the money raised by ridesharing fees is used for its intended purpose. While airport authorities frequently claim that these fees are necessary to pay for ridesharing-related infrastructure maintenance, in a concept known as “cost recovery,” this money can be used for whatever authorities want. This is an enticing proposition for airports looking for new revenue streams and none of the drama associated with traditional tax increases. Indeed, evidence suggests that these fees will only become more important to airports in the years ahead.
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Nate Scherer is a policy analyst with the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit us at www.TheAmericanConsumer.Org or follow us on X @ConsumerPal. This piece is exclusive to Broadband Breakfast.