If 2016 witnessed continued confrontation between various state governments and app-based cab aggregators such as Uber, Ola; then 2017 may lead to a better understanding of the new business model, and mutual co-operation for the benefit of all.
As per reports emerging, Centre is finalizing new norms for governing app-based cabs all over India, and based on the initial findings, it is clear that rules are being relaxed, and the app-based taxi hailing companies are being allowed to implement their business model without any hassles.
And it seems that on the issue of surge pricing, which has been the bone of contention between these two parties, a common ground is being created for smooth functioning.
Up To 4X Surge Pricing Allowed
As per the new norms, cab aggregators such as Uber, Ola can be allowed to charge up to 4-times surge pricing during night time.
During day-time, these apps can surge till 3 times of the fare, while in the night-time, that is between 12 AM to 5 AM, 4X surge will be allowed.
However, before allowing this surge rule, Govt. wants Ola, Uber and other app-based taxi hailing companies to clearly define their minimum tariffs, based on which the surge will happen.
This is clearly a big relief for the taxi aggregators, as they can now implement their business model without legal hiccups.
In August this year, Delhi Govt. banned surge pricing all over the city, which forced the app-based taxi companies to alter their business model, and incur losses. In April, Bengaluru police started seizing Ola, Uber cabs for the same surge issue. The same month, Delhi CM Arvind Kejriwal declared that surge pricing would be permanently banned.
While a section of the customers were happy, analysts of businesses and free market termed this Govt. diktat as an attempt to strangle new business models, and discourage entrepreneurship. Free market, after all, should be protected from Govt. intervention.
This recent decision by Govt. to allow up to 4X surge price makes sense, as it will allow the app-based taxi hailing companies to implement their innovative approach to solve the taxi crisis, and at the same time, allow the customers to access a service at premium charge, if and when required.
All India Tourist Permit Taxis Allowed To Operate With Taxi Aggregators
Meanwhile, Govt will also allow All India Tourist Permit cabs and city based local taxis to be operate under the taxi aggregators, which will defuse the on-going tension between the traditional taxi operators and the new age app-based taxi companies.
As local taxis and All India Tourist Permit can now work with online taxi aggregators, it is expected that consumers will get even more options to choose their best ride, and pay the best price.
Interestingly, the new norms also allows taxi aggregators to serve BPOs, IT firms and Govt. establishments under long term contracts.
Hence, in a way, the taxi market is now being opened up by the Govt.; which is a positive signal for innovation and entrepreneurship in India.