Uber is adding tipping option in app after driver unrest

[SAN FRANCISCO] Now that Chief Executive Officer Travis Kalanick has stepped aside indefinitely, Uber Technologies Inc is making big concessions to clean up its image and keep drivers from defecting.

The most noteworthy addition is the ability for customers to tip their drivers inside the app. The company rolled out the option Tuesday in Houston, Minneapolis and Seattle, with plans to expand to every US city by the end of next month.

Along with tips, Uber said it would start compensating drivers for trips canceled more than two minutes after booking and offer new insurance plans. It also said drivers would get paid more to chauffeur teenage passengers.

The San Francisco-based company is looking to appease drivers as it's under pressure from a steady stream of scandals and slipping market share at home. The company ramped up a program in recent months called Uber Listen, where it sends representatives to ride along with drivers and collect their feedback while paying them for the time.

One of the most frequent complaints from drivers was the lack of a tipping feature within the app, which has long been offered by Lyft Inc, the primary US alternative. The new policy, which is part of what Uber billed as "180 Days of Change," eliminates an important advantage for Uber's smaller foe, said Harry Campbell, who runs the Rideshare Guy, a popular blog among drivers.

"Uber adding a tipping option hurts Lyft big time because frankly, that was one of the only distinguishing factors," Mr Campbell said. "It's definitely a step in the right direction." Lyft said this week that it has collected a total of US$250 million in tips. It described Uber's adoption of tipping as "fantastic news for drivers" in an emailed statement. "Lyft is closing in on 1,800 days of in-app tipping," the company said.

"Today's tipping announcement is an important win for drivers and proves that thousands of drivers coming together with one voice can make big changes," Jim Conigliaro Jr, founder of a quasi-union known as the Independent Drivers Guild, said in an emailed statement. "Cuts to driver pay across the ride-hail industry have made tipping income more important than ever." Offering tips is a major reversal for Uber, which had promoted the simplicity of paying without tipping. It had previously suggested that tips could be used to racially discriminate. Kalanick had been opposed to asking customers for tips, arguing that restaurants and taxi companies have used tips as an excuse to underpay workers, people familiar with the matter have said. But Bloomberg reported in March that Uber executives were weighing whether to bend to public pressure and allow tips.

With Kalanick on leave after an exodus of top executives and company probes that found dozens of human-resources violations by staff during his tenure, Uber is now officially run by a committee of 14 executives. They are looking to make swift moves in an attempt to turn around the company's reputation.

"Why now? Because it's the right thing to do, it's long overdue, and there's no time like the present," Uber said in a statement. "This is just the beginning. We know there's a long road ahead, but we won't stop until we get there."

BLOOMBERG