Commission cap may force us to cut car service in Bangalore: Uber
The Karnataka government’s decision to cap commissions at 10% for app-based auto rickshaw rides is not financially viable and may impact driver revenue and user experience, Uber India said Tuesday in a statement.
“If our costs cannot be covered by commissions, we will have to find ways to offload costs that could impact the experience of drivers and passengers. Faced with these commission caps, we may have to take the difficult decision to limit Uber Auto to certain parts of Bengaluru where the service is viable,” Uber added in a statement on Tuesday.
Last month, the state Department of Transportation issued notices to app-based taxi aggregators, Ola, Uber and Rapido, requiring them to seize the supply of car reservations following complaints of overcharging. The notice mentioned that taxi aggregators are currently only allowed to provide 4-wheeler bookings under the Karnataka On-demand Transport Technology Aggregators Rules 2016. Since the license does not cover automatic reservations, the state Department of Transportation ordered them to stop providing the service. with immediate effect.
After the notice was published on October 7, multiple deliberations took place between the taxi aggregators and the state government. However, that did not lead to a mutual decision, forcing 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 more than 10 lakh residents of Bengaluru use Uber Auto to get around the city on a monthly basis. The taxi aggregator further added that around 50,000 car drivers are registered on its online platform in Bangalore alone and supplement their income through Uber.
“Car services on platforms like Uber have a different value proposition than regular street cars. With the platforms, customers have the convenience of door-to-door pickups and no longer have to walk to auto stands or hail a car on the street,” Uber added.
To activate Uber Auto in the city, drivers must be compensated for the extra distance they travel and the time they spend providing these door-to-door pickups. Official state government regulations, however, do not permit such additional charges for consumers.
“Failing to compensate drivers for pickups will lead to a poor customer experience and take us back to times before carpooling. The current fixed metered fare does not adequately compensate drivers for the extra distance traveled and time spent collecting passengers at their doorstep,” Uber added.
Uber also said that since it removed at-home compensation for car drivers, cancellations have increased by more than 50% in the city, wishing availability would drop significantly as drivers “turn down rides that aren’t economically viable for them”.
He also added that the state’s current rate structure would reduce the app-based auto-calling ecosystem in the city. “People in Bengaluru have made it clear that they value door-to-door pickups, no haggling and round-the-clock support provided by platforms like Uber. We want to work with the state on proper fare regulation which builds on the benefits that online calling has brought to the automotive industry,” Uber added.
The tussle between the Karnataka government and ride-hailing companies has persisted since the launch of Ola and Uber in 2013. In June 2018, the state issued a notice to them regarding an alleged breach of fare charging rules based on time. This came after the state’s revised pricing plans for taxis went into effect in January 2018, under which the state set fares by classifying them into different categories.
In 2017, the Karnataka Department of Transport gave Ola and Uber a three-day deadline, ordering them to stop their ride-sharing services by declaring them illegal. Besides taxi aggregators, the state has also cracked down hard on shuttle bus services such as ZipGo and other similar services offered by Ola in the past. In 2015, Bengaluru-based shuttle service ZipGo repeatedly suspended services in the city after the state transport department alleged it broke rules and was operating without a license.
Karnataka has effectively cracked down on ZipGo in a bid to maintain its monopoly on bus services offered by Bangalore Metropolitan Transport Corporation (BMTC). During the banning of ZipGO services in 2015, Karnataka’s Transport and Road Safety Commissioner said, “They are operating illegally. They have to get a permit, a stage transport permit, but they won’t get it here because it’s in the same area as the BMTC. Because of this they cannot work.
Later, the Haryana government also cracked down on the bus aggregation and shuttle service providers, Shuttl and Ola’s Shuttle, in Gurugram. These crackdowns affected shuttle providers, with ZipGo suspending business operations in April 2019. Later in June 2021, Gurugram-based bus aggregator Shuttl also announced it was closing operations and exploring merger opportunities. and acquisition, with Indian and international businesses, according to co-founder Amit Singh.