Lo­cal Taxis Keep their Old Meter

Fast Track and NTL steer clear of Uber-Ola war; to fo­cus on im­prov­ing rep­u­ta­tion

The Economic Times - - Disruption: - Bha­rani.Vaitheesvaran @times­group.com

Chen­nai: Taxi ser­vices firms Fast Track and NTL Call Taxi will steer clear of the on­go­ing pric­ing war be­tween Ola and Uber af­ter they got singed last year when they joined the rate-cut race. Uber and Ola are locked in a bit­ter price bat­tle with Ola tak­ing on UberGo with its Mi­cro ser­vice. Plus, Uber has been ag­gres­sively push­ing into non-metro ar­eas an­nounc­ing rate cuts be­tween 9% and 22% while Ola is un­veil­ing sim­i­lar ex­pan­sion plans for the Mi­cro ser­vice.

Lo­cal play­ers have kept off this fight, bet­ting in­stead on re­al­is­able tar­gets such as im­prov­ing rep­u­ta­tion among cus­tomers and fo­cus­ing on in­creas­ing sup­ply of cars.

“We are not for price cuts be­cause we do not be­lieve dis­count­ing can be a mar­ket ex­pan­sion strat­egy. Time­li­ness and qual­ity of ser­vice and good driver be­hav­iour are sus­tain­able bets,” said MPrabhu, chair­man of 15-year-old Fast Track, one of the old­est taxi ser­vices, born in the call cen­tre era and still sus­tain­ing that ser­vice.

Fast Track, which pro­vides ra­dio taxi ser­vices in Tamil Nadu, Kar­nataka, Andhra Pradesh, Ker­ala, Ma­ha­rash­tra and West Ben­gal, had an­nounced an econ­omy ser­vice early last year, pric­ing it at .₹ 11 a km but run­ning it along­side its reg­u­lar fleet of cabs charg­ing .₹ 15 a km. Its com­peti­tor NTL had tried out an econ­omy ser­vice briefly last year but pulled it out on rea­sons of un­sus­tain­able cash burn in com­pen- sat­ing driv­ers for the dis­counts.

Its hatch­backs charge .₹ 16 for ev­ery ad­di­tional kilo­me­tre af­ter the first six charged at .₹ 150. “At such a deep dis­count, the rides of­fered by Ola and Uber com­pete with the au­torick­shaw,” said G Sar­a­vanan, di­rec­tor at NTL Call Taxi.

He added that the sharp dis­count­ing could turn out to be a threat to even three-wheeler trans­port in Chen­nai, which has well over 70,000 of them. NTL is at­tempted to raise ven­ture cap­i­tal fund­ing to take on the app-based ag­gre­ga­tors, but finds a mar­ket laden with com­peti­tors and mount­ing pres­sure on vol­umes de­ter­rents in at­tract­ing in­vestors.

Uber dis­agrees with the think­ing that driver in­cen­tivi­sa­tion is the sup­port for its dis­count­ing. Bhavik Rathod, gen­eral man­ager for South and West mar­kets in In­dia for Uber, said the en­gine that en­ables low­er­ing prices was the lo­ca­tion­based ve­hi­cle dis­patch mech­a­nism. It en­ables Uber to cut idle time and the dis­tance driv­ers go with a pas­sen­ger, mak­ing them earn more ev­ery hour and pass on a por­tion to cus­tomers. “At Uber, the thought process is this: When we lower prices, it trig­gers de­mand be­cause more peo­ple would want to use our ser­vice. This leads to higher earn­ings per hour for the driver. Glob­ally, in many coun­tries that Uber launched about two and a half years ago, we have reached a stage where it is in­cen­tive-free and we are prof­itable.” Rathod told ET.

Zishaan Hay­ath, an early-stage in­vestor in Ola and founder of ed­u­ca­tion start-up Toppr, be­lieves the po­ten­tial of the taxi mar­ket is large enough for com­peti­tors to co-ex­ist and grow.

“Ola and Uber are highly in­no­va­tive com­pa­nies op­er­at­ing in a highly dy­namic mar­ket en­vi­ron­ment. What th­ese com­pa­nies were a year back, they are not to­day. Consumer fo­cus and qual­ity of ser­vice are the op­er­a­tive words here. For ex­am­ple, Ola Mi­cro, launched re­cently, is sup­posed to be grow­ing at an amaz­ing click. It could have been any com­pany that de­vised such a ser­vice and it would find space in this mar­ket,” said Hay­ath.

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