Uber Files its Take on K’taka Govt’s Surge-price Ban

The Economic Times - - Disruption: - Aditi.Shri­vas­tava1 @times­group.com

Bengaluru: Uber has sub­mit­ted its ob­jec­tions to the Kar­nataka state gov­ern­ment’s re­cent ban on “surge pric­ing” or higher fares for rides dur­ing peak de­mand. The com­pany said it was en­gag­ing with the gov­ern­ment in con­nec­tion with the no­ti­fied reg­u­la­tions which came into ef­fect on April 2. “The gov­ern­ment of Kar­nataka has shown im­mense sup­port for busi­nesses that har­ness tech­nol­ogy and in­no­va­tion and we are hope­ful of pro­gres­sive out­come,” said Bhavik Rathod, gen­eral man­ager of Uber South.

In a blog post on Wed­nes­day, the com­pany said it (surge pric­ing) helps in keep­ing more cabs ac­tive on the sys­tem. “It’s a bit of eco­nomics 101: Sup­ply and de­mand ad­just in re­sponse to price changes,” said Rathod. “On Uber, surge pric­ing means you al­ways have the choice to get a ride when you need one.”

Mean­while, Ola and Uber con­tinue to charge surge pric­ing ac­cord­ing to re­peated checks made by ET re­porters. Ola did not re­ply to ET’s queries. Surge pric­ing, a tool to in­crease sup­ply of cabs, has been used by Uber world­wide since 2012. It en­ables the ag­gre­ga­tor to raise the cost of a ride in in­cre­ments as and when sup­ply of avail­able cars gets tight and low­ers it when de­mand sta­bilises.

“Nearly all prof­its from (surge pri- cing) go di­rectly to driv­ers as part of their fares,” said Rathod

Both Uber and Ola, in re­cent months have cut the base price for cab rides by nearly 20-30%, com­pet­ing thereby with auto-rick­shaws. To cope with high de­mand in peak hours, they re­sort to rais­ing fares to as much as five times.

Ear­lier this month, the Kar­nataka gov­ern­ment stood firm on not al­low­ing 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, it said. Trans­port Min­is­ter Ra­ma­linga Reddy told ET that the gov­ern­ment has come to know of in­stances where app-based taxi hail­ing ser­vices have con­tin­ued to col­lect ex­cess fare in the name of surge pric­ing in spite of April 2 pol­icy clearly ban­ning dy­namic pric­ing. “We will tighten the law en­force­ment so that the pol­icy is im­ple­mented ef­fec­tively,” the min­is­ter said.

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