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