Delhi Government to fix maximum fare charged by cab aggregators

Delhi government is planning to put a cap on surge pricing by app-based cab aggregators like Ola and Uber, in the capital.

"The government will not allow surge pricing in the city and are going to put cap on the maximum fare that cabs charge from passengers," said Kailash Gahlot, Delhi Transport Minister to the ET. Though the cab aggregators will be allowed to charge fixed amount above the base price per kilometre.

Entrackr queries to Delhi Transport Minister in this regard has not been answered till the publication of this report. According to Ola and Uber insider sources on the condition of anonymity said that the fixed amount is likely to be anywhere around Rs 10-12 per kilometre.

Despite government monitoring, the surge pricing continues to be prevalent across the city. Passengers, often due to non-availability of public buses, are charged unregulated fare. Majorly, higher demands during peak hours lead to surge pricing.

Earlier, in April 2016, Ola and Uber temporarily suspended peak and surge pricing after Delhi govt warned cab-aggregators to be subject of impound and cancellation of permits if found continuing with the practice.

Then Uber had replied about their reasons on surge and dynamic pricing. In a statement the company said, “Surge pricing kicks in when demand exceeds supply, and ‘maximises the number of trips and minimises the number of people stranded.” It also added that 92% of trips took place on regular fares.

Ola too had temporarily stopped peak pricing in Delhi NCR to support the government’s odd-even initiative.

Both the aggregators had also faced drivers protest over their incentive structures as their earning started falling due to cut by the cab aggregators. Many divers find surge pricing only alternative way to earn extra money.

Of late, cab aggregation market witnessed flurry of entries in the country.

Chaalak Shakti, a cab union in Delhi launched its own taxi-hailing app in May this year, called SEWA to counter Ola and Uber. Online motorbike taxi company Baxi also entered cab aggregation and partnered with most of the taxi unions in the metro cities.

Among the companies, who are planning to cash in the segment, are Autorickshaw aggregator Jugnoo and Mahindra & Mahindra. Delhi government had too launched PoochO driver app for booking taxi and auto-rickshaw in the city.

On-demand cab hailing aggregation market is slated to touch $7 billion by 2020. Last year, cab-hailing apps registered almost 4X growth in 2016, as per a report by market research and advisory firm RedSeer.

The cab-hailing apps offered about 500 million rides in 2016, up from 130 million rides in 2015.