Popular Cab-Services provider in India, Uber said that drivers are earning less because of fare restrictions implied by authorities and in turn causing lower quality of services too.
The Ride-hailing company has reached this conclusion when the government is planning to cap surge charges for app-based taxi services to the 3X of the base fair.
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How Uber Reached To This Conclusion?
For understanding this, Uber considered data from cab-services in Bengaluru city as the Karnataka government has already capped fair for app-based taxi services.
They concluded that drivers in Bengaluru earn on an average 8-15% lower than driver in Hyderabad.
They also said that considering the higher cost of maintaining cabs in the city, drivers bring 20-25% less than compared to Hyderabad drivers.
Uber’s Take On This
The Director-Operations and Head of Cities, Uber India and South Asia, Prabhjeet Singh said “The less constrained and regulated pricing will be, marketplaces can run more efficiently, because we will be able to collectively offer services at the most affordable rates. I would argue that the government should de-regulate pricing for traditional transport networks like auto, kaali peeli (Black and Yellow traditional taxis) in Mumbai as well,”
He said that out of five only one trip gets surge pricing.
While talking about Bengaluru fairs, the company said that there were several factors in determining the fares paid by consumer.Though they didn’t share the details whether per kilometer fare paid by Bengaluru was lower than the one in Hyderabad.
Uber also mentioned that the state government’s decision to not include a time-based compensation for drivers was unfair, as those who got rides in areas with heavy traffic would not be paid for the extra effort. Which has led to drivers canceling rides to the traffic prone areas, leading to worsening service quality for consumers.
Karnataka Government Initiative To Cap App-Based Taxi Services
Government has capped the services pricing between Rs12-24 per km for cabs costing between 5-10 lac when radio taxi drivers and tourist taxi operators protested against the app-based taxi services who were providing services at a very lower cost.
This cap helped both ways as it ensures minimum earnings for cab drivers while also protecting consumers from paying high cost. This resulted in reduced earnings for drivers in Karnataka.
But that’s not the only reason behind it. Uber had also reduced incentives last year which is equally making this situation worse for the cab drivers.
Center’s Take On Surge Charges
At the start of September LocalCircles has done a survey to find out consumer’s sentiment towards app-based taxi services. The results were shocking as most consumers have raised concerns about two main points.
- Penalty should be applicable on cab drivers when they cancel a ride with 45% respondents
- Surge charges should be capped at 25% above regular fares with 45% respondents and 49% asked for prohibition of surge pricing
Government’s upcoming policy would be adopting a similar mechanism as implemented in Karnataka but they are planning to cap surge prices to 3X instead of 2X prices. They may cap 4X surge for night fares too.
With this implementation, app-based cab services may get some relief but the common man will have to think more before hailing a cab.
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