Uber might start limiting Uber Auto to select parts of Bengaluru if the commission charge remains capped at 10 per cent, according to Nitish Bhushan, Uber’s Head of Central Operations in India and South Asia.

Speaking to BusinessLine, Bhushan said, “This could mean the service becoming unavailable during certain time of the day, or service gets completely curtailed in a few pockets of the city, among other alternatives.” 

Bhushan said that the company’s first objective is to work closely with all relevant stakeholders to make them realise the value that Uber is adding and the right commission charge which Uber feels is 25 per cent. 

“In eventuality, we will have to explore possibilities, where service gets completely curtailed in certain parts, some of these costs getting offloaded to the customers, or additional services not being offered at all,” said Bhushan. Uber believes that short distance (up to 4 km) auto trips at 10 per cent commission rate are especially not viable for the company as compared to the long distance trips.

Earlier this month, the High Court of Karnataka allowed ride-hailing apps (Ola, Uber and Rapido) to levy 10 per cent convenience fee (or commission) above the auto fares fixed by the state government, and the applicable GST, till the government fixes fares as per the law. Earlier, the ride-hailing companies were charging a flat convenience fee of around ₹40 and auto fares on these apps were crossing ₹100 for a 1-2 km ride.  

Karnataka Transport Department and ride-hailing apps have reportedly failed to reach a consensus on the convenience fee charged on auto rides in Bengaluru, in a meeting held last week. The next court hearing is scheduled on November 7.

Value proposition

Bhushan argued that auto services offered by platforms like Uber have a different value proposition than regular street-hailed autos. Through platforms, customers have the advantage of doorstep pickups, and no longer have to walk to auto-rickshaw stands or hail an auto off the street. 

Additionaly, booking an Uber Auto comes with features like GPS tracking, safety helpline, 24×7 phone-call and in-person support, rider and driver on-trip insurance and law enforcement response assistance. 

“Street-hailed autos don’t come with any of these features and platforms incur significant costs to provide these value-added services. In addition to these services, Uber must invest to build and operate the platform. We have tech and engineering expenses, marketing spends to onboard more drivers and riders, and many other costs. Commissions are used to cover our costs and make the business model viable,” said Bhushan. 

Since removing the doorstep compensation, cancellations of Uber Auto are said to have increased by over 50 per cent in the Bengaluru. Bhushan noted that the current fixed metered fare does not adequately compensate drivers for the additional distance traveled and time spent in picking up a passenger from their doorstep. “Over a period of time, this will result in, lower availability of autos for e-hailing, higher cancellations by drivers (especially on short trips) and offline solicitation of extra cash and haggling,” he added. 

Over 10 lakh residents of Bengaluru use Uber Auto to get around their city and are served by over 50,000 auto drivers who supplement their earnings via Uber. In August, Prabhjeet Singh, President, Uber India & South Asia, told BusinessLine that the country level, Uber currently does more trips on three- and two-wheelers in India than four-wheeler cabs and taxis.

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