K’taka Nixes Surge Pricing by App-based Cabs
New policy for IT-enabled taxi-hailing apps set to cap fares, help in supply of cabs
Bengaluru: Karnataka has stood firm on not allowing surge pricing for app-based ride hailing services such as Ola and Uber in its new policy for the tech-enabled taxi aggregators, turning down a major demand from them. The fare and other charges, the policy says, cannot be higher than the fare fixed by the government from time to time. Which means the app firms must charge a fare within a band the upper limit of which is capped.
“We have not allowed the surge pricing because the purpose of using the technology is to increase service standards for cab users at competitive fares. We have focussed this policy around this, and given a lot of importance to safety aspects,” Transport Minister Ramalinga Reddy told ET.
In a set of concessions aimed at increasing the supply of cabs so that fares are under check, the government has dropped the age restrictions it had proposed for vehicles to qualify as taxis. The government had proposed that only cabs that are less than two year old could enter the app-based ride hailing segment and they could stay in service until the age of six. Anyone with a valid licence and living in Karnataka for two years can drive a cab for an app service. The government had earlier proposed five years, and this small relief might increase the number of drivers available to app-based aggregators. The government has allowed taxi permit holders to switch between ride hailing apps as per his choice. This piece of regulation may increase the competition among the app firms to retain cabs under their fold with more lollipops to drivers/permit holders. “We came to know that app-based firms were forcing drivers (permit holder) to work only for them. We have, however, recognised a driver’s freedom to choose the app he wants to associate with,” the Transport Minister said.
Responding positively to the concerns expressed by Uber, the government has slashed by half the license fee and the security deposit payable by ride hailing services. The app firms will now pay a security deposit of .₹ 1 lakh for a fleet of up to 1000 taxis, .₹ 2.5 lakh for up to 10,000 taxis and Rs 5 lakh for more than 10,000 taxis. In the same way, the fee for grant of aggregator licence is halved to Rs 50,000, and likewise, the fee for other services too have been cut.
Uber is said to have tied up with 30,000 plus cabs in Bengaluru, and possibly for this reason, it has not been in favour of a security deposit. It had objected to the deposit insisting that it is only a facilitator of the service, and not an operator. While fixing responsibility on both the aggregator and the cab driver for any violation of the permit condition, the government has laid down in its policy that if any untoward incident were to occur during the course of a ride, “the licensee (aggregator) should inform the same to the licensing authority (Transport department) as well as to the jurisdictional police immediately.” The policy also continues with the requirement of a panic button inside cabs which passengers can use in the event of a crisis to reach the control room.
Uber, Ola, Meru, Mega, Bangalore Taxi, KSTDC, CarzOnRent, and Spot Taxi, currently operate as ride-hailing service in Karnataka under a licence obtained under the Radio Taxi Scheme, 1988. None of them has commented yet on the new policy.