The Kejriwal government has decided on prohibiting taxi aggregator services like Ola and Uber from using surge pricing. For a long time now, this controversial method, surge pricing – where cabs charge higher fares; as high as 5-7 times the normal charge has been operating and it gained little attention from the government.
However, with the second phase of odd-even scheme ongoing in Delhi, the demand for private taxi service providers like Ola and Uber soared up due to restrictions on usage of private car. Complying with the demand, the fares too soared up to five times the usual price. This awakened the Delhi CM – Arvind Kejriwal and he in a series of tweets called surge pricing “daylight robbery” and banned it. Initially, this was applied for just the odd-even scheme days however, later it was declared banned permanently.
“Some taxis are saying that they will not provide cab if they are not allowed to loot. This is open blackmailing and the government will not let that happen”
-Arvind Kejriwal
This ban is aimed at stopping the high fares. However, it’s of little relief to the Delhi’s public as the aggregators are now displaying their own tantrums. No cars available, is being displayed on various Delhiites’ Uber apps. This move gained a mixed reaction from residents of Delhi several of them were happy and saw this as a step forward, however majority of them were unhappy due to shortage of cabs.
This announcement resulted in Ola and Uber temporarily suspending surge pricing. However, around seventy-five cabs had been impounded by the government’s official team for over-charging its customers.
This move has upset the business model of both Ola and Uber cab aggregators. Uber is known for implementing surge pricing even during disasters! It has been criticized regularly for surge pricing globally. Uber defending itself twitted, “In the last 3 days and also during the first ODD-EVEN in January, less than 8% trips happened on surge in Delhi.”
Giving an explanation on how much surge pricing was charged Uber twitted, “Average surge multiplier was under 2x. Even with surge, Uber was more affordable than Radio Taxi & Govt. Prescribed rates.”
Surge pricing is compared to fluctuating pricing used by hotels and airlines according to demand and supply. Thus it’s the matter of desperate need, how badly you need to hail a cab. Defending surge pricing Uber stated, “Our goal: Get you a ride within minutes, at a push of a button – even on the busiest days. Surge pricing makes it possible, almost always.”
Uber also sent text messages to its customers asserting that due to absence of surge pricing, they may face shortage of cabs and also longer waiting periods.
Ola the Indian startup and main competitor of Uber in India decided to react a bit diplomatically to this situation. Ola twitted, “We’ve temporarily pulled out Peak Pricing in Delhi, in support of Govt’s Odd-Even initiative. Travel at 1x fares & make Odd-Even a success.” In order to co-operate with the government’s scheme Ola is even giving away free rides on the next two Fridays of this month to its users on its 500 shuttles in Delhi. It has even introduced 1,000 odd numbered vehicles in Delhi. It’s encouraging people to use its ride-sharing options by various campaigns.
Just a few weeks back Karnataka’s government had issued a directive that prohibited Ola and Uber from increasing their price in an unusual manner and thereby trying to restrict the surging prices. These initiatives by Karnataka and Delhi may play a big role in deciding the fate of surge pricing in India.
