By Akash Sriram
(Reuters) - Lyft (NASDAQ:LYFT) said on Tuesday the company will guarantee weekly earnings for drivers, a first in the U.S. ride-hailing industry dominated by larger rival Uber Technologies (NYSE:UBER), in a move to lure more drivers to its platform.
The ride-hailing market has largely been a duopoly between Lyft and Uber in the United States, with the former that owns a roughly 30% market share locked in a fierce competition with the rival for riders as well as drivers.
Last year about 15% of Lyft drivers across the United States earned less than 70% of what riders paid, after external fees, but Lyft assured to pay the difference if drivers made below 70% at the end of a week.
"We think hopefully it will get more drivers driving for Lyft, but also just make the whole sector stronger," CEO David Risher told Reuters in an interview.
Late last year, Uber and Lyft agreed to pay $328 million to settle allegations that the companies withheld wages from drivers and did not provide paid sick leave in New York state.
Investors believe that the ride-hailing sector is set to see robust demand, however, supply of drivers may vary due to a variety of factors such as the economy and wages, among others.
"We have more drivers now than we've had, I think, since the middle of 2019. It's strong and I tell you what, it's getting even stronger," Risher said.
While the move could pile up costs, the action was well within Lyft's plan for the year, Risher said. The cost savings from restructuring last year were in part to ensure the company could afford to guarantee "drivers got their fair share," he added.
Lyft also announced other actions to improve transparency such as allowing drivers to see the split between them, the company and external fees on the app.
It also said drivers could earn more on scheduled rides, making extra bucks for the time they may spend waiting, and those offering 50 rides in an electric vehicle a week, will earn an extra $100 between Feb. 12 and July 1.