Taxi aggregators Uber, Ola dress up surge pricing in new clothes

Priyanka Pani  Mumbai | Updated on January 20, 2018 Published on June 27, 2016

Uber   -  Reuters

Surge pricing is back on the streets, this time with a spin.

Days after global taxi-hailing app Uber rolled out “upfront fares”, Bengaluru-based Ola has introduced a concept called “low peak pricing”.

And what does it do differently?

While the app, in its earlier avatar, would display that fares for the ride would cost 1.3 times or twice the normal rates, under Ola’s ‘new’ low peak pricing scheme, a customer would be shown the actual rate per kilometre applicable at the time of booking.

For example, if the normal tariff is ₹6/km, the new system tells the customer that the revised tariff under ‘low peak’ pricing is ₹9/km. This, in place of the earlier system that would display a tariff 1.5 times the normal. “The attempt is to let the rider know upfront how much he would have to pay before booking the ride. Rate per kilometre gives a better understanding of the final tariff,” explained an Ola call centre executive.

However, this by no means puts an end to surge pricing. Tariffs will still be calculated taking into account the demand, traffic, tolls if any, and tax.

Ola did not respond to a query from BusinessLine on this matter.

Uber had recently introduced “upfront fares”, while clearly mentioning that surge pricing would continue.

Run-ins with govts

This comes even as Uber and Ola have been directed by various State governments, acting on complaints from customers and taxi unions, to end surge pricing or face the consequences. The Karnataka government had threatened to ban Uber’s services in the State if it did not end surge pricing. In Delhi, Uber had last month dropped the surge feature and sent a letter to the transport commissioner stating that its taxis will charge a per-kilometre fare and will not exceed the government-prescribed rate.

Though riders detest surge pricing, drivers prefer it as it earns them a higher income.

“Brands must set clear expectations for a great customer service. I see it from the perspective of customer experience: the expectation in this case is clear and upfront,” said Paritosh Sharma, Head of Payment Channels at PayU and an expert on digital payments.

Published on June 27, 2016
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