To me it seems the disconnect here is between the fixed fee on one side (the passenger) and the flexible fee on the other side (the driver). Uber is, sort of,

To me it seems the disconnect here is between the fixed fee on one side (the passenger) and the flexible fee on the other side (the driver). Uber is, sort of, acting as an insurer and underwriting the cost of the journey. The passenger pays a fixed fee for a projection of how much the route will cost and the driver gets paid by how much it actually costs in driving time and distance. If there is some sort of unexpected delay and the journey takes longer then, presumably, the driver will be paid more than the passenger paid so Uber will lose out. As with all insurers Uber charges a higher initial charge to act as a buffer and minimise the chances of losing money on the journey. I can't really see any way of getting round this as long as the passenger pays a fixed price and the driver is paid a flexible fee.