Honolulu has moved a step closer to limiting how much Uber, Lyft and other ride-sharing companies can charge customers through surge pricing, when the demand for rides increases the price.

The Honolulu City Council voted 6-3 Wednesday to approve Bill 35 after a long line of Uber and Lyft drivers and customers expressed their opposition.

The ride-sharing companies said it would be the first restriction of its kind in the United States if it’s signed by Mayor Kirk Caldwell.

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The city already caps how much taxi companies can charge, and taxi drivers said the new rule will level the playing field.

Councilwoman Kymberly Pine applauded Council Chair Ernie Martin for introducing the measure. She said it will help local taxi companies stay afloat.

“You’re thinking about the future and making sure that these Wall Street companies don’t have a monopoly over transportation in Hawaii,” she said. “You’re making sure these local people who spent 20 years of their life building their small five-cab company still can pay their mortgage.”

David Jung, the owner and operator of EcoCab and CityTaxi, said capping surge prices protects “our community’s working poor and seniors on fixed income.”

Unlike taxi cabs, Uber and Lyft customers know how much their ride will cost before accepting the service and getting into the car.

Opposition to the new rule came from Uber and Lyft drivers and customers who argued surge pricing encourages drivers to hit the road when demand goes up, so supply meets demand.

If customers cannot afford the surge price, they can log off the app and wait for a few minutes until the price goes down, said Uber driver Lisa Gonzales.

Timothy Burr, director of public policy for Lyft, said 92 percent of the time, a Lyft driver picks a rider up within 10 minutes of the customer requesting the ride.

“We are available at the touch of a button,” said Uber driver Tyler Green. “Why use old-school political influence to deprive us of better transportation that will prepare the city for the future?”

Council members Joey Manahan, Ron Menor and Brandon Elefante voted against the measure. Council members Pine, Martin, Ann Kobayashi, Ikaika Anderson, Trevor Ozawa and Carol Fukunaga voted for it.

The new regulation directs Honolulu’s Department of Customer Services to review and set the maximum price every two years, or whenever the city deems it necessary, based on average prices measured by the federal Bureau of Labor Statistics’ consumer price index.

The department’s deputy director testified in opposition to the bill.

Cory Lum/Civil Beat

“We don’t have any guidelines, we don’t have any benchmarks and we don’t have any history of doing that, so it would be difficult,” said Randy Leong.

Burr said he will continue to work with city officials on the new policy.

“A cap on surcharge pricing completely breaks our business model,” Tabatha Chow, Uber’s senior operations manager for Hawaii, told Civil Beat. “We’ll have to seriously consider whether or not we can continue to operate in the city.”

She told council members that Honolulu has the highest taxi prices in the nation and Uber is 40 percent cheaper.

Both Uber and Lyft stopped operating in Austin, Texas, when the city passed a law requiring drivers to get fingerprint-based background checks, but returned when the Texas Legislature overrode local regulations and removed the fingerprint requirement, the Los Angeles Times reported.

The Associated Press contributed to this report.

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