Karnataka, Delhi rein in Ola & Uber cabs

Chennai: Surge pricing in app-based taxi service is not a local phenomenon. Taxis, which overcharged customers during peak hours, were taught a lesson by the Delhi and Karnataka governments.

The first to crack down on these app-based cabs – specially the popular Uber and Ola – came from the Karnataka government in early April when it came out with an official notification constraining them from increasing fares on their own when the demand surges.

Immediately after it received complaints from commuters, the Karnataka government put in place Karnataka On-Demand Transportation Technology Aggregators Rules, 2016, thus putting an end to surge pricing by cab firms. After the rules came into force, transport department officials even seized about 70 cabs belonging to Uber and Ola for overcharging commuters.

The fare mandated by the Karnataka transport department is Rs 19.50 per km for air-conditioned cabs and Rs 14.50 for ones without air conditioning. The next action on these cabs came from the Delhi Government when commuters took to social media to slam these companies for the surge pricing during the odd-even days that was in force in the national capital as part of the measures to curb pollution.

The cab firms charged two to three times higher than the normal fee for hiring vehicles, forcing Chief Minister Arvind Kejriwal to publicly warn that action would be taken against those who charge more than the prescribed rate for hiring of cabs.

Going a step forward, the Delhi government also announced that Uber has permanently dropped its surge pricing in Delhi, citing a communication from the San Francisco-based firm that said the per-kilometre fare charged on its platform in Delhi will not exceed the government-prescribed rate.

Shreya Gadepalli, South Asia Regional Director, Institute for Transportation and Development Policy, says there are two sides to the issue of surge pricing. “Surge pricing — balancing supply and demand — is pragmatic. Those who have a higher need at any given moment — like getting to an airport — get access to the service, albeit at a higher price, when the supply is low. However, there should limits.

Appropriate regulations are required to ensure that a company or its drivers do not game the system, without banning the idea outright,” she said. “Taxi and auto fares should also be revised at regular intervals to account for inflation and fuel price increase based on a pre-determined formula,” she added.