According to Futu Securities, the leader in online car-hailing, Uber (UBER.US) has proposed to lower the base salary of New York drivers and made other suggestions as it tries to reduce the fare in one of its largest markets. In a letter sent to the regulatory authorities, the company hopes that the Taxi and Limousine Commission (TLC) in New York City, responsible for setting driver salaries, will lower the per-mile rate in its driver compensation formula from the current $1.360 to 6.1% lower at $1.277. In the letter, the company cites the drop in gasoline prices as a key reason for the rate reduction.

For future adjustments related to inflation rates, current regulations stipulate an annual adjustment in March. Uber also proposes to set the upper limit at 3%, or the average rate reflected by the Consumer Price Index, and suggests following the lower of the two.

Uber is submitting its proposals as TLC prepares to modify the rules on driver minimum wages, which could impact the ride-hailing and operational costs of one of the company's largest markets. CEO Dara Khosrowshahi noted during the company's third-quarter earnings call last week that Uber's core ride-sharing business in the USA has slowed down as insurance policy costs have shifted higher, leading some consumers to reduce the number of rides.

Uber's performance outlook is relatively subdued due to cost effects. The company expects fourth-quarter orders to be between $42.75 billion and $44.25 billion, with the mid-point slightly below analysts' expected $43.7 billion. The company anticipates fourth-quarter adjusted EBITDA to be between $1.78 billion and $1.88 billion, an increase of 39% to 47% year-on-year. The mid-point is also slightly below market expectations.

Uber's Senior Legal Counsel Nicholas Davoli wrote in the letter that the reduction in per-mile rates is necessary to ensure prices 'do not exceed inflation, so passengers can continue to afford travel.' The company estimates that this will result in an average single trip price decrease of about 42 cents and believes that cost reduction will stimulate passenger ride demand, offsetting the impact of reduced base rates on total driver income.

The company is not requesting a change in the rate of $0.583 per minute, which is another key element in the formula covering drivers' net income after deductions.

TLC Commissioner David Do stated in an email that his institution is reviewing Uber's petition. David Do said at a public hearing in September that he is preparing to announce more rules by the end of the year to protect driver compensation and fill loopholes. Earlier this summer, the two major online car-hailing companies in the USA, Uber and Lyft, often locked drivers out of their apps to circumvent compensation rules.

In the statement, Do mentioned that the committee received "extensive" suggestions from multiple stakeholders regarding the amendments. He added, "We are seeking to introduce a set of fair rules that will fully utilize TLC's power to address existing loopholes."

A survey by the media in October found that locking - temporarily preventing drivers from logging in and working - was unpredictable and widespread, causing significant economic and mental pressure on workers. Meanwhile, these companies are expected to save tens of millions or even billions of dollars in driver wages in the future.

"Uber's attempted actions are truly shameful, they have put drivers in dire straits due to strikes," said Bhairavi Desai, executive director of the New York Taxi Workers Alliance, representing over 28,000 drivers. "In my view, Uber sees an opportunity in this administration, as they are unlikely to face any penalties for violating the city's own wage regulations."

It is understood that the organization has led multiple protests against strikes and petitioned regulators for changes in early September. With the support of New York City Comptroller and mayoral candidate Brad Lander, the alliance urged the committee to propose stricter data reporting requirements when calculating driver compensation, as driver pay depends on ride statistics provided by the companies.

Lander and driver groups hope the committee will consider the duration of lockdowns (which may result in some drivers' work hours being scrubbed from records) when recalculating industry-wide compensation formulas next year.

TLC responded to the organization in a letter last Friday, anticipating to propose rules "in the near future," but not guaranteeing full or partial adoption of their suggestions.

In Uber's public petition, the company requests a reduction in per mile rates, as it states that in recent years, driving costs have remained stable or decreased, "while wage inflation continues to rise." Regulators have 60 days to consider or reject the petition.

According to the data of the American Automobile Association, national gasoline prices have been steadily declining since April, down by about 38% compared to the peak in June 2022. In the letter, the company also mentioned that used car prices have decreased in recent years, while new car prices and leasing prices have remained stable in the long term.

The petition did not mention the expected increase in commercial insurance prices, a significant expense that licensed drivers need to bear. Media reports last month stated that the New York State Department of Financial Services had approved the largest taxi insurance company in the city, the American Transportation Insurance Company, to raise rates, but the company has since declared bankruptcy.

Uber Technologies stated that since 2019, the wage rates introduced by TLC to adjust to the inflation rate have increased by more than 20%, fully covering the inflation costs.

Uber spokesperson Josh Gold stated: "We recognize that commercial insurance costs may accelerate in March and catch up with the 20% increase already implemented by TLC, which is why we did not apply for a reduction in insurance fees."

It is understood that Uber Technologies has been lobbying TLC for changes to other compensation rules in recent years. An email sent to Deputy Commissioner James DiGiovanni on September 5th, as required by public records, showed Gold sharing the proposed modifications, including prohibiting online car-hailing or taxi companies from dispatching new drivers within a quarter if they cannot keep existing drivers busy enough. It also suggests imposing fines of at least $0.1 million if a company fails to effectively manage its driver pool each year.