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Karnataka cab driver’s suicide puts Ola, Uber pricing under scanner

Sangeetha Chengappa & Mamuni Das Bengaluru/Delhi | Updated on April 02, 2021

The case brings into focus how the pandemic has nearly destroyed the cab business

Early this week's shocking case of a suicide of a cab driver belonging to the Karnataka state public sector tourism corporation threw the entire cab service, including Ola and Uber, into disarray, leaving hundreds of customers stranded. It led to a flash strike by more than 3,000 drivers and workers protesting against the unfair competition they face with Ola and Uber players.

But the case immediately brought into focus how the pandemic has nearly destroyed the cab business. Simultaneously, more prominent players like Ola and Uber continue to offer market-disrupting price to the customers to retain their businesses.

“Covid-19 has destroyed the cab business. Additionally, Pratap (the suicide victim) is the victim of unfair competition from Ola and Uber that offer very low prices to customers at ₹8 to ₹10 per km, which is wiping out businesses of cab companies like Megha, Meru, KSTDC who are all solely dependent on Airport customers for their livelihood. Recently, Pratap had taken a loan of ₹50,000 at high interest rates to pay off his car EMI, annual insurance premium and to update his car documents. The State Govt has announced an ex-gratia payment of ₹5 lakh to his bereaved family. Anjum Parvez, Principal Secretary (Transport) had asked us for four days to fix up uniform pricing structure across all cab companies, however they have already issued the new pricing structure effective from today” said Tanveer Pasha, former President of Ola and Uber Drivers Association, who met Pratap and exchanged a few words of consolation with him in the ICU hours before he succumbed to over 70 per cent burns.

The prices fixed by the Karnataka State Government for cab aggregators and other taxi operators, effective April 1, 2021 is as follows:

Category A: For vehicles that cost ₹16 lakh and above – ₹150 for 4 km. Minimum price/km – ₹27, Maximum price/km - ₹54.

Category B: For vehicles that cost ₹10-₹16 lakh - ₹120 for 4 km. Minimum price/km – ₹24, Maximum price/km - ₹48.

Category C: For vehicles that cost ₹5 – ₹10 lakh - ₹100 for 4 km. Minimum price/km - ₹21, Maximum price/km - ₹42.

Category D: For vehicles upto ₹5 lakh – ₹75 for 4 km. Minimum price/km -₹18, Maximum price/km - ₹36.

“We will discuss the new pricing structure with the Principal Secretary tomorrow and have a meeting with all the Unions and decide whether to accept this pricing or go in for an indefinite protest till we get justice” said Pasha.

Like the agitating cab drivers in Bengaluru, several drivers that BusinessLine spoke to in the national capital region (comprising Delhi and its adjoining cities Gurgaon, Noida, Faridabad, Ghaziabad) who are on app-based aggregator platforms have been seeking a higher chunk of fares collected by cab-aggregators like Ola and Uber. Many drivers point out that the fare they now get on per/kilometer basis is much lower than what they got pre-lockdown and even the government defined rates for taxis.

“From the total fare collected from passengers, we get a very small portion particularly in inter-city travel like Delhi-Noida and Delhi-Ghaziabad, as a part from the company’s commission, some ₹80 -₹100 per trip goes to the local administration like Municipal Corporation of Delhi or UP government,” said Rakesh, a cab driver. While business is better now than the lockdown period, recovery is still at under 60 per cent compared to pre-Covid levels. With many companies opting to work from home, cabs attached with those companies have started using Ola or Uber app, which has led to a higher supply of vehicles chasing a lesser number of riders, pointed out Akshay, a cab driver.

Shaik Salauddin, National General Secretary Indian Federation of App-based Transport workers (IFAT) said, "Platform-based business such as Uber and Ola do not adhere to state-regulated taxi fares and offer services at relatively low prices to customers who choose these app-based services over taxis which adhere to fares fixed by transport authorities. Uber and Ola compete unfairly with existing taxis and drive them out of the market, resulting in people like Pratap being unable to earn a livelihood."

The Road Transport Ministry had recently issued guidelines for cab aggregators where it had specified that commission cannot be more than 20 per cent. Enforcing these rules are a state’s prerogative. A few drivers told BusinessLine that 20 per cent is pretty “high”, and they said that several times they end up paying over 20 per cent as commission. Some complained that the amount cut from their fares is higher than what they expect, and the cab-aggregator’s call centre tells them that the extra amount has been cut due to GST, among others. As temperatures soar, announcing summer, drivers are wary of their expenses further ballooning as passengers will demand AC, which means fuel cost. “I would rather not drive than having to drive with AC,” rued Kishore. Even auto-rickshaw fares in Delhi are now comparable with cab fares, said Swaraj.

On being contacted, both Ola and Uber said no disruption of services in Bengaluru or anywhere else in the country.

Published on April 01, 2021

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