Taxi wars: Who will finally surge ahead?

Experts unsure if the demand for Ola, Uber will increase or black-and-yellow cabs will beat them in the race once state controls peak-hr rates

MUMBAI: Rashmi Chendvankar, 33, a writer from the western suburbs, takes app-based taxis, Ola or Uber, to work. She is glad the service — which picks her up from home and drops her to the office gate -- saves her the hassle of refusals by autorickshaw drivers. Rashmi represents lakhs of Mumbaiites who have switched to app-based taxis for its comfort and cost-effectiveness. Her only grouse is surge pricing – the hike in fares (twice or even four times) during peak hours.

Although the companies don’t disclose the number, RTO sources said there are around 25,000-30,000 app-based Ola and Uber taxis operating in the city. To control surge pricing by aggregators and ensure level-playing field for all taxi operators, the state has proposed the City Taxi Scheme 2015, which is in its final stages of approval, and is likely to be announced in the ongoing session of the state legislature. But will this really solve the problem or will it only make the taxi wars worse?

According to the proposed policy, the companies will have to apply for an aggregator’s licence. The policy will also impose a restriction on the minimum and maximum fare, making it tough for aggregators to operate tourist taxis. The operators will have to provide panic buttons on every vehicle and carry out background checks on drivers.

App-based taxis are popular among commuters as they are easy to book, well-maintained, air-conditioned, with a transparent billing system and wellbehaved drivers. “In scorching heat, who would say no to an AC taxi at a cheaper rate,” asked Suresh Palve, a Mumbai Central resident, who occasionally takes app-based taxis.

Another major reason why commuters prefer the service is they do not refuse fares. Vijay Shinde, a Lalbaug resident, said, “I do not mind paying extra for prompt and hassle-free service.”

According to transport industry sources, discounts and free rides offered by app-based taxi companies, too, helps in drawing commuters.

The popularity of the app-based taxis posed a problem to the government while imposing restrictions on it, as it could have led to public outrage. A senior official said complete restriction on app-based taxis would be like refusing an effective technology. However, not restricting the operations would hamper the business of the black-and-yellow taxis. Another concern of the government is allowing a company to have a monopoly over the business, as it could lead to troubles in the future.

According to the documents accessed by HT, the transport department is not in favour of creating a new class of taxis as it will lead to “regulatory complexity”. In the redrafted proposal, it has suggested restrictions on app-based taxis operating during non-peak hours and restricting the surge pricing to 1.5 times of the fare of Cool cabs.

The question is whether the app-based taxis will follow the restrictions and change their business models? “They will continue to attract business despite the restrictions,” said Ashutosh Atrey, a transport activist and road safety expert, “After some time, people will get so used to it that they won’t bother much about the restrictions.”

Another expert Ashotosh Vaidya, suggested restriction on the time fare, which is charged on a per-minute basis.