As ride market leaders cut down incentives and commissions, the industry is witnessing reversals.
New Delhi: Vikram Shukla, 36, who booked an Uber cab, saw after waiting for 10 minutes that his ride had been cancelled by the driver. Shukla was not able to find any other cab instantly and had to take an auto ride at a price equivalent to Uber. In the process, he wasted 15 minutes. The story of Vikram Shukla is not an isolated case as many other riders are increasingly going through the same experience after the lockdown as services had declined and the response of many drivers is not very professional. These incidents point towards a deepening crisis in the ride market which witnessed massive growth in the last decade. The Sunday Guardian traced the present crisis in the ride market, how the industry and workforce is responding to it. “The Covid pandemic has disrupted the market big time. In reality, the market slowed down since 2018, with the company cutting down our incentives and commissions. But, still before Covid, we used to generate a good amount of profit as we got a high number of rides. After March 2020, things changed and the company further decreased our profit margin. People were waiting for things to improve after Covid but even now, the market has not improved. Now, many drivers are leaving the industry. I personally know drivers who after booking offer the customer less amount for service and ask them to cancel the ride. The primary reason for the drivers to bypass the Uber guidelines is the massive decrease in commissions and incentives,” said Alok Pradhan,a resident of Gurgaon, who has been driving Uber for the last five years. It is not that only Uber had suffered, even other top ride market leaders have also seen reversals in their businesses in the last three
The Sunday Guardian tried to get a response from Uber on the rising complaint of customers in recent times regarding the drivers, services of the company and how the Covid pandemic and rising fuel prices had adversely impacted its workforce and business model, but despite multiple attempts no response from Uber was received. It is a known fact that between 2014-18, when the market boomed, the price of fuel was low. Now, prices have increased and drivers have to bear the pain of increasing prices. Moreover, during 2015, Uber was making inroads in the Indian market. They offered good incentives to the drivers to expand their market. Now, things have changed drastically.
The crisis is not only in a big company like Uber but every other cab service provider is facing the same issues. Recently in the Delhi-NCR region, cab and taxi strikes were called by the unions that led the passengers to face a difficult time. The unions had the same issues—they were demanding a hike in fares and slashing of CNG prices to offset the impact of rising fuel prices. The strike led to a shortage of cabs and autos across Delhi-NCR.
It is not that Uber is just cutting down on drivers commissions and incentives, but it is also taking other cost reduction measures. A report by Fintracker points out that Uber had cut down its advertising cost by around 50% after the pandemic. Recently, the company has raised trip fares in Delhi-NCR by 12% and in a few other metros by 15 percent, but drivers talking to the newspaper argued that the profit coming from raised trip fare will go to the company.
Many believe that a comprehensive plan for application based cab aggregators (ABCA) needs to be implemented, so that the industry can achieve long term success. Recommendations for application based cab aggregators have been made in the past by think tanks but the government had not decided on it yet. The prestigious Gurgaon based Management Development Institute (MDI) had recently published a paper in which it suggested draft policy recommendations for application based cab aggregators (ABCA. It pointed out that for long term success in India, the regulators should balance regulations in a manner that regulations do not discourage innovations in business models and encourage competition in the marketplace. The Sunday Guardian also reached to the Ministry of Road, Transport and Highways for a reply about the guidelines for cab aggregators, but no response was received.