Choking Ola, Uber innovations: After surge fare caps, Karnataka wants a floor fare

By: | Published: March 10, 2017 3:10 AM

As per a Business Standard report, the state transport department has contended that the interests of drivers using the platform will be served if there was a floor fare—drivers in the state, and elsewhere, went on a strike to protest the sharp fall in their earnings once, as they ran out of easy cash, Ola and Uber scaled down the generous incentive plans they had earlier to attract drivers.

If Karnataka does go ahead with its plan to put a floor fare for taxis booked via cab-hailing apps, that would be its latest in a series of measures it has taken to choke the innovation that Ola/Uber have ushered in.

If Karnataka does go ahead with its plan to put a floor fare for taxis booked via cab-hailing apps, that would be its latest in a series of measures it has taken to choke the innovation that Ola/Uber have ushered in. And, as before, it is being done with a view to regulate the attendant disruption. As per a Business Standard report, the state transport department has contended that the interests of drivers using the platform will be served if there was a floor fare—drivers in the state, and elsewhere, went on a strike to protest the sharp fall in their earnings once, as they ran out of easy cash, Ola and Uber scaled down the generous incentive plans they had earlier to attract drivers. While the scaling down of incentives was only to be expected since Ola/Uber’s free money was never going to last forever, a floor fare means that the cab aggregators can no longer offer the competitive fares that brings users to them in the first place—if the floor were fixed even close to what drivers in the state are demanding, it would completely rob Ola/Uber of their competitive edge vis-a-vis even regular cabs, let alone auto-rickshaws.

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With the attractive lower fares no longer available, users are likely to switch to other transport options or use cab-hailing apps less frequently; over even the medium-term, Karnataka would have hurt the interest of the drivers instead of protecting it. The state has been on a slippery slope when it comes to framing regulations for cab aggregators. First, it came up with caps on fares to check surge-pricing that calibrated fares with demand. It then wanted Ola/Uber to maintain a stipulated fleet-size even though the aggregators are not taxi services themselves, but are closer conceptually to taxi-stands.

Then, just this January, it declared ride-sharing—that harnessed a greater chunk of the car’s capacity on a single ride—illegal. By robbing taxi-aggregator companies like Ola and Uber of their USP, the state is moving towards making them the same as the ordinary black-and-yellow taxi services or, since they also use apps, like a Meru Cabs with a fixed per-km fare. Given how Ola and Uber’s investment plans—the latter committed last year to invest $1 billion in its India operations—means more jobs, greater fulfilment of transport potential within cities and self-employment for many, it is unfortunate that state that benefited the most from India’s IT revolution would adopt such a regressive stand.

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