Uber & Ola Users, It’s time for increase in cab fares


It’s not hard to understand why Uber and Ola drivers across India are angry. Similar to many other parts of the world, in India also, the cab companies are trying to rein in the massive splurge that they have been indulging in to attract more customers & drivers. While on the rider’s side, the changes have so far been limited, on the driver side, the changes are all too visible.

Cab aggregators are wary about discussing discounts and incentives, saying competitors could take advantage of it. But based on conversations with drivers and industry experts, the estimated daily driver incentives have come down from an average of Rs 2,000 to Rs 600 in the past few weeks. In other words, from the Rs 75,000-90,000 a month that drivers earned in 2015, this has come down to Rs 40,000-50,000.

“The drivers had adjusted to a new lifestyle and taken on commitments in line with the higher income levels. This has now gone for a toss,” said former CEO of Meru cabs, Siddhartha Pahwa.

One of the biggest of the expenses for the drivers is the EMI on the car loan, which in many cases is about Rs 15,000 a month. The promise of high incomes had persuaded many to buy new cars and join Ola or Uber, sometimes both. The drivers also had to work much harder to get those higher incomes. Where they previously did five trips a day, the incentives encouraged them to do as many as 12 to 15.

This was important for cab aggregators because it helped to drastically reduce the ETA (expected time of arrival) of a cab for a customer to 4-5 minutes.

But the incentives pushed the aggregators’ bottom lines deep into the red. The correction was anticipated, but clearly, when they on boarded drivers, the aggregators don’t seem to have done anything to keep driver expectations modest.

Based on the views of several analysts, TOI estimates that under the efficient app-based cab hailing system, a cab in Bengaluru can break even at Rs 15km (including the aggregator’s commission). That’s approximately the rate at which an Ola Micro today operates, assuming that an average trip is 10 km (the fare includes the base fare, the per km charge and the time taken charge). So a Micro driver’s entire profits come from the incentives that he gets.
Since the incentives are coming down, drivers want the fares to rise. Even Rs 2/km increase in fares will add a substantial sum to their daily earnings.

Some of the drivers are demanding that the incentives be done away with and that fares be fixed at Rs 19.50, the upper limit laid down by the state government.

“This will ensure that our income is not affected badly and the drivers can take home a decent amount every day,” says President of Uber, TaxiForSure and Ola (UTO) Drivers and Owners Association, Tanveer Pashar. He also stated that an over-supply of cabs has resulted in fewer rides for drivers and wanted Uber and Ola to stop adding more cabs on their platforms.

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Sameeksha Bhardwaj, From ITvoir News Desk