Commission cap may force us to scale down Auto service in Bengaluru: Uber | The Financial Express

Commission cap may force us to scale down Auto service in Bengaluru: Uber

To enable Uber Auto in the city, drivers need to be compensated for the additional distance they travel and the time they spend providing these doorstep pickups.

Commission cap may force us to scale down Auto service in Bengaluru: Uber
The state’s transport department last month issued notices to app-based cab aggregators Ola, Uber and Rapido demanding they seize providing auto bookings over complaints of overcharging.

The Karnataka government’s decision to cap commissions at 10% for app-based auto rickshaw rides is not financially sustainable and may impact driver earnings and user experience, Uber India said in a statement on Tuesday.

“If our costs can not be covered through commissions, we will have to find ways to offload costs that could impact the experience of drivers and riders. In the face of these commission caps, we may have to make the difficult decision to limit Uber Auto to select parts of Bengaluru where the service is viable,” Uber added in a statement on Tuesday.

The state’s transport department last month issued notices to app-based cab aggregators Ola, Uber and Rapido demanding they seize providing auto bookings over complaints of overcharging. The notice mentioned that cab aggregators currently are licensed to provide only 4-wheeler bookings under the Karnataka On-demand Transportation Technology Aggregators Rules of 2016. Since the licence doesn’t cover auto bookings, the state’s transport department instructed them to stop providing the service with immediate effect.

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After the notice was issued on October 7, multiple deliberations took place between cab aggregators and the state government. This, however, did not lead to a mutual decision, compelling the former to move the Karnataka court for an emergency hearing last month.

Currently, Uber and other players in the city are operating under a stay order granted by the Karnataka High Court. Uber said over 10 lakh residents of Bengaluru use Uber Auto to get around the city on a monthly basis. The cab aggregator further added that around 50,000 auto drivers are registered on its online platform in Bengaluru alone who supplement their earnings via Uber.

“Auto services on 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 stands or hail an auto off the street,” Uber added.

To enable Uber Auto in the city, drivers need to be compensated for the additional distance they travel and the time they spend providing these doorstep pickups. State government’s official regulations, however, do not allow for such additional charges to consumers.

“Not compensating drivers for pickups will lead to poor consumer experience and take us back to pre-ridesharing times. The current fixed metered fare does not adequately compensate drivers for the additional distance travelled and time spent in picking up passengers from their doorstep,” Uber further pointed out.

Uber also said that ever since it removed doorstep compensation for auto drivers, cancellations have increased by over 50% in the city, wish availability reducing drastically as drivers “turn down trips that are not economically viable for them”.

It also added that the state’s current pricing structure will curtail the ecosystem of app-based auto hailing in the city. “The people of Bengaluru have made it clear that they value door-step pick-ups, no haggling and round-the-clock support that platforms like Uber provide. We want to work with the state on appropriate fare regulations that build on the benefits that e-hailing has brought to the auto sector,” Uber added.

The tussle between the Karnataka government and the ride-hailing companies has been persisting since the launch of Ola and Uber in 2013. In June 2018, the state issued a notice to them over an alleged violation of rules for charging the time-based fare. This came after the state’s revised tariff plans for taxis came into effect in January 2018, under which the state had fixed fares by classifying them into different categories.

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In 2017, Karnataka’s transport department had given a three-day deadline to both Ola and Uber, directing them to stop their cab-sharing services by declaring them illegal. Apart from cab aggregators, the state also cracked down heavily on bus shuttle services such as ZipGo, and other similar services offered by Ola, in the past. In 2015, Bengaluru-based shuttle bus service ZipGo suspended services several times in the city after the state transport department alleged they had violated rules and were operating without permits.

Karnataka effectively cracked down on ZipGo in an effort to maintain its monopoly over bus services offered by Bangalore Metropolitan Transport Corporation (BMTC). While banning ZipGO services in 2015, Karnataka’s commissioner for transport and road safety said, “They are operating illegally. They have to obtain a permit, a stage carriage permit, but they won’t get it here because it’s in the same area as the BMTC. Because of this, they can’t operate.”

Later, the Haryana government also cracked down on bus and shuttle aggregator service providers, Shuttl and Ola’s Shuttle, in Gurugram. These crackdowns affected shuttle providers, with ZipGo suspending its business operations in April 2019. Later in June 2021, Gurugram-based bus aggregator Shuttl also announced that it was shuttering its business and exploring merger and acquisition opportunities, with Indian and international companies, according to co-founder Amit Singh.

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First published on: 02-11-2022 at 05:15 IST