1. Uber and Ola fare hike case: Drivers must realise their income will fall as demand shrinks

Uber and Ola fare hike case: Drivers must realise their income will fall as demand shrinks

As if taxi unions protesting against cab aggregators and state governments wanting to put all manner of fare caps on them wasn’t enough trouble for Ola and Uber, drivers associated with the app-based cab-hailing platforms have launched protest against low fares and falling returns.

By: | Published: January 25, 2017 5:29 AM
(PTI)

As if taxi unions protesting against cab aggregators and state governments wanting to put all manner of fare caps on them wasn’t enough trouble for Ola and Uber, drivers associated with the app-based cab-hailing platforms have launched protest against low fares and falling returns. As per a Business Standard report, many drivers in Bengaluru went on a strike on Monday calling for better compensation. Both Uber and Ola rode their way to enviable market-shares by keeping fares low for users while attractive driver remuneration models—that included sizeable incentives and rewards—ensured a large base of cabs. With revenue pressures, however, the aggregators have been forced to revise the model. Given any significant fare jump would mean erosion of user base, Uber and Ola have started trimming their attractive driver compensation.

The striking drivers are pushing for increasing the fare to Rs 19.50/km. That way, they reason, their earnings may go up to the earlier levels. But given how the likes of Mega and Meru, two of the leading radio-cab companies, lost out to Uber-Ola because of the latter’s low-fare model, if the aggregators were to start charging as per the drivers’ demand, they are likely to go the Mega/Meru way. A better strategy would be to look at alternative income sources. For instance, Uber recently announced its food-delivery service, UberEats, to compete with the likes of Swiggy for food delivery—under this, the company will tie up with restaurants to deliver food using its cab and motorcycle services. While this would mean better unit economics for Uber—Swiggy and others are bleeding trying to maintain this—whether it would mean better incomes for drivers is something that remains to be seen.

  1. Rakesh Agarwal
    Jan 25, 2017 at 4:01 am
    Whether you deliver food or you deliver pengers, the cost doesn't change. In fact, nobody is going to s out Rs.100 on top of food worth Rs.400-500. Taxi fare should be recovered from taxi pengers. Cross subsidising can't go far enough to sustain mainstream business.
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