The controversy over surge pricing by taxi hailing apps Uber and Ola is refusing to subside. After Delhi CM Arvind Kejriwal threatened to cancel their permits, both Ola and Uber decided to suspend surge pricing during the period of odd-even rule in Delhi.
However, this was not enough it seems. As per latest update, Arvind Kejriwal wants complete ban on surge pricing, even after odd-even rule ends. It seems that Delhi Govt. wants a fixed price band, within which these taxi apps can charge their customers pertaining to demand-supply rule.
Or in other words, Delhi Govt. wants to alter the basic business model of these startups, and wish to impose their own tariff rules.
Uber Officials Meet Delhi CM; Ola Issues Statement
Yesterday, Arvind Kejriwal compared surge pricing with ‘daylight robbery’, as he tweeted: “Surge pricing is daylight robbery. No responsible govt can allow that. Some taxis saying they will not provide (sic) cab if they are not allowed to loot. This is open blackmailing n govt will not let that happen,”; adding that even after odd-even rule ends, the Govt. won’t allow surge pricing.
Surge pricing is daylight robbery. No responsible govt can allow that(1/2)
— Arvind Kejriwal (@ArvindKejriwal) April 20, 2016
Some taxis saying they will not provide cab if they are not allowed to loot. This is open blackmailing n govt will not let that happen(2/2)
— Arvind Kejriwal (@ArvindKejriwal) April 20, 2016
Immediately after this announcement, Uber officials including Uber North general manager Gagan Bhati rushed to meet Delhi CM and Transport Minister. They had one hour+ meeting, but no immediate solution came out.
Meanwhile, Ola issued a statement: “To make Govt’s Odd Even initiative a success, Ola has temporarily pulled out Peak Pricing in Delhi NCR. We have also rolled out an on-ground campaign where volunteers are spreading the message of ride-sharing and car-pooling in support of the scheme……..A lot of demand is being witnessed in business districts, around metro stations and other popular areas in the city.”
At the same time, Delhi Traffic police continued to seize Ola and Uber taxis in Delhi. As per unconfirmed reports, around 60-70 cabs from these two companies have been seized under various sections of Motor Vehicle Act.
Is Delhi Govt. Discouraging Startups?
Uber, which pioneered the concept on app based taxi hailing platform use surge pricing as part of its primary business model. Similarly, Ola uses the increased price to compensate the discount offers and additional services like WiFi within the cab.
By controlling the pricing model, and forcing these private and successful firms to alter their tariffs, Delhi Govt. is giving wrong signal to the startups who wish to launch innovative, tech based services.
In future, Delhi Govt. can trespass into any business, and twist their arms to control their business model, and enforce their own rules.
As we had shared earlier, the fundamentals of free market doesn’t allow interference of the Govt. in determining the prices. Let the market determine it as per the business demand. If Delhi Govt. wish to launch their own cab service with a pre-determined price band, then no one is stopping them.
A Delhi Govt. official said, “Work on the policy has started only lately, so it may take another 15 days or even perhaps a month to finalise details. Our duty is to give a neutral policy which ensures that businessmen enjoy doing business and commuters have a good time riding cabs.”
We will keep you updated as more details come in regarding the issue of price surge in Delhi.
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Surge pricing is a predatory scam!! Good for them banning it! If these apps increase the base price that’s ok, just don’t shock people when they are in the biggest rush!!
some of his decisions are wrong. He need to think about both people side and business side before taking the decision. The decision should be favor to both.