What is Karnataka government’s new uniform fare structure for cabs?

The government notification issued on February 3, 2024, clearly states that cab aggregators are not allowed to charge any extra fees beyond what is officially set. This means surge pricing is now banned

February 09, 2024 09:00 am | Updated 04:58 pm IST - Bengaluru

Travellers using Ola taxi service at Kempegowda International Airport (KIAL BIAL) during the Bengaluru Bandh called today by various organisations against Cauvery water sharing dispute between Karnataka and Tamil Nadu.

Travellers using Ola taxi service at Kempegowda International Airport (KIAL BIAL) during the Bengaluru Bandh called today by various organisations against Cauvery water sharing dispute between Karnataka and Tamil Nadu. | Photo Credit: BHAGYA PRAKASH K / THE HINDU

The story so far

The Karnataka government has introduced a new uniform fare for all cabs in Bengaluru, including those operating using aggregator platforms like Ola and Uber, and traditional city taxis.

The new fare system introduces a simple three-tier structure based on the car’s value, eliminating the previous flexible pricing. This new order from the government came following numerous complaints from both passengers and cab drivers regarding the “exorbitant fares” imposed by cab aggregators.

What the new rule says

The government notification issued on February 3, 2024, clearly states that cab aggregators are not allowed to charge any extra fees beyond what is officially set. This means surge pricing is now banned. The notification emphasizes that fares should only be based on the rates set by the government, and any unauthorized charges are strictly not allowed.

Under the revised structure, the base fare for a distance of up to four kilometres starts at ₹100 for vehicles valued up to ₹10 lakh, with an additional charge of ₹24 per kilometre thereafter. For vehicles priced between ₹10 lakh and ₹15 lakh, the initial four-kilometre fare is set at ₹115, with a subsequent per-kilometre rate of ₹28. Vehicles exceeding the ₹15-lakh mark will have a minimum fare of ₹130 for the first four kilometres, with each additional kilometre priced at ₹32.

The order also specifies that waiting is free for the initial five minutes and thereafter will be billed at ₹1 per minute. App-based aggregators will collect a 5% Goods and Services Tax (GST) from passengers, and toll charges may be passed on to riders. Night time fares, applicable from 12 a.m. to 6 a.m., will incur a 10% surcharge.

Also read: Calls for uniform fare structure for autorickshaws too in Bengaluru

What prompted the government to form these rules?

According to Karnataka’s Transport Minister Ramalinga Reddy, the government implemented a uniform fare for all cabs in response to numerous complaints received by the Transport Department. “Both commuters and cab drivers expressed concerns about ride aggregators overcharging, and drivers reported that the aggregators were imposing higher commission fees. Hence we decided to bring out uniform rules,” he added.

In August, 2023, Reddy has convened two rounds of meetings involving cab and auto unions and one of the important agenda of these discussions was the matter pertaining to cab aggregator applications.

During the meeting, unions representing auto drivers and owners called for a prohibition on aggregators imposing commissions exceeding 5% of the total fare. They also raised concerns about aggregators charging exorbitant fares from commuters while simultaneously imposing high commission fees on cab and auto drivers.

Will cab aggregators adhere to the new fare structure?

Following the announcement of the new fare structure by the Transport Department, the primary concern revolves around its execution. The true repercussions of the revised fares will only become apparent once cab aggregators put the new fare structure into practice.

According to the order, the new fares were supposed to be implemented immediately; however, cab aggregators are yet to implemented it (as on Thursday).

Reddy has warned that aggregators must comply with the order, or they will face consequences. “Aggregators must adhere to the new fare structure, or we will take action. This has been a long-standing demand from drivers and passengers,” he said.

Speaking to The Hindu, K. Radhakrishna Holla, President of the Karnataka State Travel Operators’ Association (KSTOA), said, “It is doubtful how the government order will be implemented as the rate fixing directive has been given not only for Bengaluru city but also for the entire State. The order does not specify the monitoring mechanism for implementing the fare structure, and it lacks details on the nature of action if the rule is not adhered to.”

Is this the first time the government has issued cab fare regulations?

No, the transport department has previously set cab fares. In 2018, it marked the first instance of the government establishing fares for aggregators, categorized into four classes based on vehicle prices.

Fare structure was again revised for app-based cabs in 2021 and categorised into four slabs based on the value of vehicles. Non-app-based city taxis in Bengaluru were subject to varying minimum fares depending on the presence of air conditioning and this ride-hailing app seldom adhered to these regulations, persistently implementing surge pricing, alleged both commuters and cab drivers.

In 2021, the fare structure was as follows: for vehicles priced up to ₹5 lakhs, the initial fare was ₹75 for the first four kilometers. For vehicles with a cost ranging from ₹5 lakhs to ₹10 lakhs, the fare was ₹100 for the first four kilometers. For those priced between ₹10 lakhs and ₹16 lakhs, the initial fare was ₹120 for the first four kilometers. Vehicles exceeding ₹16 lakhs incurred a fare of ₹150 for the first four kilometers.

Hemanth Kumar, Additional Commissioner, Transport Department, and Secretary, Karnataka State Transport Authority, said that the new system replaces the previous setup, which included minimum and maximum fares for different categories. Moreover, the new structure removes the non-A.C. category, citing the standardisation of air-conditioned amenities across all vehicles.

Did the new fare rules precede the government’s app launch?

The rule of standardized fares for cabs holds significance, given that the Karnataka government is gearing up to introduce its own ride-hailing app soon. Reddy said, “We are currently in the development phase of the app, and it is scheduled for launch in a month or two. This government-run app will adhere to the fare regulations set by the government, with a comparatively lower commission charged from drivers in contrast to existing private aggregator apps.”

In response to an increase in complaints from taxi and auto drivers against private ride-hailing platforms, in August 2023, the government initiated the development of its own app. The primary reason behind launching this ride-hailing app is the discontent among cab and auto drivers with the practices of private ride-hailing platforms, particularly concerning what they allege are substantial commissions the companies impose.

Do cab drivers support the new rule?

Cab Drivers and traditional taxi operators have expressed approval for the uniform fare rule, stating that it will be advantageous for both drivers and passengers. Holla said, “Previously, the transport department provided cab aggregators with flexible fare options, and now it has introduced a fixed fare. We appreciate the initiative and hope that proper implementation of the rule will be beneficial for both drivers and passengers.”

Tanveer Pasha, president, Ola Uber Drivers’ and Owners’ Association, welcomed the government bringing in a uniform fare structure. “Under the previous system, there were concerns over both driver’s earnings and costs to the passengers,” he said, while appealing to the government to ensure driver welfare and price consistency for passengers while enforcing the new fare structure.

What do cab aggregators say?

Ola and Uber, leading players in the market, are yet to respond to queries from The Hindu regarding the new directive. This report will be updated if a response is received.

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