Road to Riches is Paved with Low-cost Choices. Ask Uber
Bengaluru: Uber and Ola are opening a new front in their ongoing battle for leadership in India’s cab aggregation business with specific services that target the value-conscious consumer.
Uber aims to invest further in lowcost riding options like carpooling, bike taxis and auto rickshaw services to snag a wider swathe of consumers and take the battle to Ola. Last week, Ola launched its cheapest taxi-hailing service- OlaMicro — and claims the new product is its most popular yet. “We want to make transportation available for everyone and cabs may not always be the most affordable option for all segments,” said Amit Jain, VP, Uber India.
Pricing is proving to be the most intensely fought battle for cab aggregators, in their hunt for more passengers. In addition these companies are also facing regulatory pressure on a commonly used tool — surge pricing — where cost of a cab ride increases during peak hours. Last week, the Karnataka state government said it would not allow surge pricing for app-based ride-hailing services.
The fare and other charges cannot be higher than the fare fixed by the government from time to time, according to the new policy. Uber has in the last two years focused more on providing low-cost ride options.
Ola’s Micro service offers air conditioned cab rides at .₹ 6 per kilometre, in a bid to attract those who haven’t taken a cab ride before.
“(It) will be the most pocket friendly mode of intra-city cab travel,” sa- id Pranay Jivrajka, Chief Operating Officer at Ola.
Experts are of the view that the demand for taxis is slowing down, if not flattening, which is the reason why taxi app companies have to increase the customer base for other products. “In order to tap customers who use public transport, there is a need to give economical and faster option for shorter distances,” said Jaspal Singh, founder of transportation consulting firm Valoriser Consultants.
Uber, which launched a bike taxi service in March, is now “assessing how two-wheelers can be the right answer for short-distance trips particularly those that help provide last mile connectivity”, said Jain.
And in several cities, the company no longer offers luxury sedans for its premium service but has replaced it with large-size vehicles like the Mahindra SUV and XL indicating a larger vehicle by size and not by the experience itself.
Before the launch of any low-cost category, Uber’s Jain said the firm makes some key changes to its app to drive adoption. “We expect this (auto) segment to be large on cash payment and hence that will be available right from launch,” he said.