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Home / News / Bengaluru, brace for higher cab fares and longer waits

Bengaluru, brace for higher cab fares and longer waits

Latest Govt. Jobs 16:18:00 News Edit
Bengaluru, brace for higher cab fares and longer waitsIt's not difficult to understand why Uber and Ola drivers across India are angry .Like in many other parts of the world, in India too, the cab aggregators are trying to rein in the massive splurge that they have been indulging in to attract customers and drivers.While on the consumer 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, TOI estimates that the 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 Siddhartha Pahwa, former chief executive of Meru Cabs, which started as an airport cab service and which now competes partially with aggregators.

One of the biggest expenses 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.

If customers have to wait longer, they may prefer to take an autorickshaw. But the incentives pushed the aggregators' bottomlines deep into the red.The correction was anticipated, but clearly, when they onboarded drivers, the aggregators do not appear to have done anything to keep driver expectations modest. Based on the views of several analysts, TOI estimates that under the efficient appbased cab hailing system, a cab in Bengaluru can break even at Rs 15km (including the aggregator's commis sion).

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.

Now that the incentives are coming down, drivers want the fares to rise. Even a Rs 2km increase in fares will add a substantial sum to their daily earnings.

Some 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 Tanveer Pasha, president of the Uber, TaxiForSure and Ola (UTO) Drivers and Owners Association.

He also said 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. But this won't be an easy decision for the aggregators. “If they increase the fare, the trips will go down and will further exacerbate the revenue crisis of the drivers," said Pahwa.

And not adding cabs runs the risk of raising ETAs. Mrigank Gutgutia, engagement manager at online commerce consultancy RedSeer, said shorter ETAs are key to people keeping their private cars at home, and therefore also key to the aggregators' success.He sees around 10% of the existing users dropping off from the system if the fares rise, but he thinks the drop off could be a lot more if the average ETA goes beyond 15 minutes.

Pranav Sisodia (24) takes Uber every day to travel between his home in Ghaziabad and his workplace in Noida, incurring Rs 400 to Rs 450 daily. The digital marketer said he will start using his own car if the aggregators raise the fare. “It will cost me only around Rs 260," he said.

Meanwhile, the strikes have taken autorickshaw drivers back to their heydays.“The number of short-haul trips have increased as people are not willing to wait for 15-20 minutes for a cab to reach you," said Manjunatha, an auto driver in Bengaluru.
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