Home » random » travel » Karnataka Bans Surge Pricing on Ola and Uber; Maharashtra to Follow
Last updated: April 8, 2016 at 12:50 pm

Karnataka Bans Surge Pricing on Ola and Uber; Maharashtra to Follow

Uber Surge Pricing

If you have been a victim of surge pricing on the major cab-hailing apps in India, then this will be a good news for you. For Ola and Uber, this might be a bad news considering their major source of income is surge.

Karnataka Government, on 6th April, created and introduced a format set of rules and regulations governing taxi aggregators like Ola and Uber. According to these rules, these companies cannot charge anything extra over the base fares to a customer. The prices will be fixed and will be continued as set by these companies.

Usually during peak hours, the taxi-hailing companies would levy extra charges, 2 to 3 times the base prices, to compensate for low number of drivers available. Such pricing has been digging a huge hole in the pockets of users who need taxis in urgent situations.

Karnataka Government has also laid out rules for compulsory check of driver’s background, accurate GPS tracking in cabs throughout the journey and a panic button always operational in the cab.

Maharashtra’s take on this

Inspired by the Karnataka Government, Maharashtra Government is all set to create a similar set of rules for taxi aggregators

According to a report by Business Standard, a Maharashtra minister said,”’The fare will be decided on the cost of the vehicle and the engine capacity. The transport department will enjoy powers to cancel licences for non-compliance.”

Over and above what Karnataka has set, Maharashtra will also introduce induction schedule for taxis. At the time the license will be granted, only 25% of the fleet can be acquired. Every quarter going forward, 25% more can be acquired and finally complete fleet can be acquired in a year.

This news is actually quite a let down for Uber, and it must be very awkward as well, since Uber signed an agreement with Maharashtra Government to create jobs in the state.

Is removing surge pricing going to benefit the common man?

Monetary restrictions are always good for the commuters, especially those who use the services daily. It is definitely a bad news for Ola and Uber as they will now have to search for other ways to generate that extra source of revenue.

Now that the surge pricing has been removed, it would hit the driver’s wallet directly as well. Drivers would get the share of surge, giving them incentive to drive during odd and peak hours in cities. Imagine you’re working an extra hour or two but still getting a poor compensation for your hard work.

This in turn would result in low number of cars on the streets and hence anger amongst the commuters. Although I agree surge pricing in ridiculous, but there needs to be a way or an incentive to have more fleet on the ground running at odd hours.

Other State Governments are also thinking about implementing these rules to curb surge pricing completely, which could have both positive and negative impacts. Let’s see what people have to say about the new policy in Bengaluru.

[Source]

"Karnataka Bans Surge Pricing on Ola and Uber; Maharashtra to Follow", 5 out of 5 based on 12 ratings.

9 Comments

Click here to post a comment

  • […] has not been very kind with cab-aggregators in the recent past, and by banning surge pricing in the state and seizing bike taxis only a few days after launch, they are making it difficult for […]

  • Police Seize Ola-Uber Cabs In Bangalore For Surge Pricing; Is Govt. Destroying Free Market Fundamentals? says:

    […] cabs are being seized after Karnataka banned surge pricing in their state as they issued a diktat that such taxi apps cannot charge anything beyond the basic […]

  • this is a false logic.. surge pricing happens even in regular hours, when there are many cabs on the ground.. and the argument that there will be lesser cars on the road if surge is removed is again hollow. as long as competition is there, both these companies will try to get their share of the pie.. and hopefully try to increase it.. they are in for the long haul.. and can pump millions to stay afloat.. as it is their pricing is highly unrealistic.. n they are running only because both of them are pumping millions to reimburse drivers from their end as well. it is not a market driven model at all.

  • This would adversely impact the common man. I use these services daily to commute to office. At the time if surge I wait for some time for surge to drop. To cover up the loss due to removal of surge these companies will have to increase prices for everyone. Not good.

  • Your understanding about Surge Pricing seems completely wrong. Prices surge when there is more demand and less number of cabs available. So the customers who are willing to pay more get the cabs. It has nothing to do with odd hour or extra working hours.

    • Hey Hemant! By mentioning odd hours and peak hours, we wanted to imply that not many drivers would want to work during that time, it was the surge pricing that made them do so. Also, not necessarily is the demand high at all the times, we have seen in the past that even during usual hours there is surge because of some or the other holiday(hence less drivers on the road).

      • I’ve asked a few Uber drivers, I think the money during surge pricing isn’t shared with the drivers, but only with Uber themselves… Yes, there are other ways, where they have incentives between 6-10 AM and 4-10 PM, however it’s not got to do with surge. Most uber drivers, just drive between 6 AM to 10 PM and log off, then again restart between 4 PM to 10 PM, cause they want to meet their target of 5 rides to get extra incentive and earn close to INR 3400 a day… Some prefer to switch to OLA during that period or have a second driver drive the cab… But surge pricing will impact Uber, Ola and in turn they may have to drop offers/incentives to drivers to accommodate for extra source of income, or get creative and come up with a way to meet the demand…

Indian Startup Funding Investment Chart List 2016

Check out our Youtube Channel!

Reliance JIO Opens YEARLY RECHARGE! Get 120GB Data Free Now!

Great news for Jio Prime users. The BOGO offer which gave you 5GBs of data free for 1 month has not …

WOAH! Over 84% of JIO Subscribers Will Continue even After Free Offer Ends!

As the free trial of Jio’s free services under the Happy New Year Offer is ending, the market is r…

How to Get FREE AIRTEL 4G HOTSPOT DEVICE With New Offers!

Bharti Airtel has come up with two new special offers of Rs. 3,200 and Rs. 4,000 for the customers w…

JIO Takes Legal Action; Says OOKLA Falsified Airtel Speed Results!!

After Airtel started touting themselves being the "FASTEST MOBILE DATA NETWORK" in India with TV com…

Subscribe to Our Youtube Channel

who's online