Surge pricing by Ola and Uber has become a much-talked about topic in the Capital, but a closer look at the matter reveals another issue.
After Chief Minister Arvind Kejriwal’s warning, Ola and Uber have temporarily suspended surge pricing until the odd-even scheme is underway. On Monday, Mr. Kejriwal tweeted that strict action would be taken against taxis that charge more than what the government has prescribed.
While ‘surge pricing’ — the extra cost a rider needs to pay when the demand is high and supply is low — was being understood as ‘overcharging’, Roshan Shankar, who is Advisor to the Delhi government, in a series of tweets, clarified: “Delhi Govt. hasn’t asked Uber/Ola to stop surge, but to only follow law. Surge can still go to 2-2.x less than their claimed average (sic).”
The prescribed government rates vary for different categories of vehicles. But, it is not clear which category do cabs associated with taxi aggregators come under.
Neither are they registered as ‘Black and Yellow Taxi’, nor as ‘Radio Taxi’. This can lead to the assumption that they fall under the ‘Economy Radio Taxi’ – the only category left – which caps the price at Rs. 12.5 per km.
In that case, The Hindu’s analysis of Ola and Uber’s rates show that even without surge price, the existing rates may not comply with government regulation in certain cases. While both the aggregators advertise the cheapest ride at Rs. 6-7 per km, the variable ‘ride time rate’ adds to the overall price.
For travelling a distance of 20 km in Delhi (assuming travel time is 1 hour at a speed as 20 km/h), only uberGo and Ola Micro cost less than the prescribed rate of Rs.12.5 per km. In this case, Ola Mini, even without surcharge, would cost Rs.14.4 per km — which violates government norms. The premium services would only cost more. In another case — a faster ride perhaps — the fare may come down. The per km rate is variable and changes based on the ride time.
This analysis points towards major loopholes in legislations for pricing by cab aggregators, which essentially don’t own any vehicles. They only claim to be ‘marketplaces’ connecting the rider and driver. If surcharge is not the issue and overpricing is, as per the law, the government needs to be clear about the laws they are talking about.
(With inputs from Sriram Sivaraman)
