Why do Uber and Ola drivers ask users to cancel rides?

During an October afternoon, there was one question that Uber driver Irshad Khan was asking his passengers unfailingly: “I’ll complete the ride offline, but can you cancel it on the app and pay me the fare that the app is showing?” 

Before one such passenger could enter the car, he asked him the same question.  With the permission of Khan and the passengers he was ferrying around, Entrackr tailed his cab for five rides that day to find out why Khan is compelled to make this request. None of these passengers—three men and two women—agreed to cancel the ride on the Uber app. 

“I’ll save a lot of money if you cancel the ride on the app, Sir,” Khan said. “Pay me ten rupees less than what the estimated fare is in the app, but please cancel the ride there. I promise I’ll drop you safely”. 

Khan and other drivers like him have been asking passengers this question since cab-hailing services were allowed after the strict lockdowns of last year, which impacted their already dwindling earnings severely. The reason: so that they can make more money on the same ride, by not paying a commission to Uber or Ola, which according to Khan, can be close to an additional Rs 10,000 each month for him.

On every completed trip booked via the app, Uber charges a percentage of the fare as commission. 

When it started operations in India in 2013, there used to be no commission — the driver kept the entirety of the fare. But things have changed drastically since then. “When I first started out as an Uber driver, the commission was around 5 percent. A year later it was lifted to 15 percent and today, it is close to 35 percent, sometimes even more than that,” Khan said. 

This increase in commission has meant that drivers take home a lot less money now than they used to a few years ago. And this is a big reason why increasingly, more of them have been asking riders to cancel rides on the app — as a means to bypass the 35% commission that Uber would pocket on every trip completed via its app. 

Ola and Uber drivers are not alone in protesting against the tech companies they work for. Over the course of this year, workers contracted with almost every major platform company like Swiggy, Zomato, Urban Company and Amazon to name a few have raised their voice against what they believe are exploitative working environments. They don’t enjoy the same basic benefits as the employees of these companies, owing to their ‘independent contractor’ status with them. 

In one of the rides that Khan completed on that October afternoon, the passenger paid a total of Rs 368 for the trip, but he only earned Rs 219.68 out of it. Rs 10 was deducted as taxes for the ride, meaning that for this particular ride, Uber charged a commission of well over 35 percent.

Khan estimates that on an average, if he manages to convince five to seven passengers to cancel their ride on the app, he can easily make an additional Rs 300-400 everyday. Compounded, that makes an additional Rs 9,000-Rs 12,000 a month. 

So, he asks this question to almost every passenger he meets. “Because I have a job that requires me to drive every minute of the day, I can’t take to the streets against the company’s policies. This is my mark of protest against them,” Khan said. 

As a result of this high commission structure, Ola and Uber drivers have for long been struggling to make enough money. The pay has been progressively diminishing. Khan, during Uber’s early days in India, had months where made close to Rs 1 lakh. Today, however, earning even Rs 30,000 seems like a monumental task. 

But something more monumental was happening during the heyday of Uber and Ola in India, some seven years ago. Early drivers gave the two companies free word of mouth marketing, bringing in more drivers onto the platforms. 

Many of these drivers did not previously have a car, and to get onboarded, they took out a loan to buy one. But once the earnings diminished, paying monthly instalments started becoming an impossible task. Rising fuel and natural gas prices, and a ravaging pandemic have only worsened matters further. 

Today, paying off those loans is one of the biggest challenges facing these drivers. A report by Inc42 from earlier this year suggested that Ola and Uber collectively lost over 30,000 cabs as drivers struggled to pay monthly instalments. 

With more than four lakh kilometres on its odometer, Khan’s three-year-old Swift Dzire is running on its last legs. But a monthly payment of Rs 16,000 that goes towards the now flailing car won’t stop anytime soon. 

“If I can manage to complete even five rides outside of the app everyday, I can make up a large chunk of the money for this monthly instalment. I know the app gets me these rides in the first place, but if I don’t try to bypass it, I won’t be able to manage my monthly finances,” Khan said. 

How much is a kilometre worth?

There is another reason for drivers asking riders to cancel the ride on the app: a low per-kilometre fare. 

Ola driver Gopal Singh said that on an average he gets paid around Rs 7 per kilometre, which is significantly lower than the standard 10 rupees that traditional taxis in Delhi charge per kilometre. 

After completing a 38 kilometre ride on Ola at around 4 in the morning from a housing society in Greater Noida to the Hazrat Nizamuddin railway station in Delhi, Singh earned Rs 281.14  — a little more than Rs 7 per kilometre. 

Once he completed that ride, he picked up a passenger from the railway station and dropped him at a housing society in Gurugram, travelling around 34 kilometres. At the end of it, he made Rs 252, or roughly Rs 7.4 per kilometre. 

Singh, 38, has been driving on Ola’s platform for over four years now. He joined Ola after one of his friends joined the platform. At the time of joining, he was making anywhere between Rs 50,000-Rs 70,000 a month before accounting for fuel and maintenance expenses. That, however, has today fallen down to Rs 30,000-Rs 40,000 a month. 

To recoup the reduction in wages, Singh, like Khan, also asked both the passengers that night if they could cancel the ride on the app. Since it was around 4 in the morning, both the passengers denied, citing safety reasons. 

In response to a detailed questionnaire asking about their commission structure, average per kilometre fare and the number of hours drivers stay logged into their platform, Ola declined to comment. 

Uber sent a boilerplate statement in response to the detailed questionnaire. A company spokesperson said that “drivers were at the heart” of its operations and that Uber ensures they have access to on-trip insurance and microcredits. 

“We consistently work to improve the experience of drivers, engage with them across cities, and deeply value their feedback. Additionally, we have 24x7 emergency phone support for drivers,” said a company spokesperson. 

‘Dire situation’

“Drivers are asking customers to cancel the rides through the app and continuing offline to avoid paying commissions is a pretty good indication that drivers are not being compensated enough,” said Zothan Mawii, a doctoral student at the University of Maryland, who has researched on the labour economy in the internet age. 

Mawii said that there are high costs involved in driving for these platforms that may not seem obvious to consumers. 

“Drivers have to fork out money for petrol, insurance, car repairs, and loan repayments out of their own pockets. The recent hike in petrol prices coupled with Uber and Ola's ever changing incentive structure means that hourly rates for drivers have fallen drastically compared to pre pandemic times,” Mawii added. 

Ambika Tandon, who is a policy officer at the Delhi-based Centre for Internet and Society and studies the intersections of gender and technology, said that drivers also end up putting in a lot of labour for which they are not paid by the companies. 

“That is time spent looking for rides and then travelling back and forth...So for example, companies don't give drivers the destination of customers. And this then also leads to a lot of drivers cancelling rides when they find out the destination,” Tandon said. 

Of course, when drivers try to game the app’s system, they always run the risk of being deplatformed in case Ola or Uber gets to know about it. 

“To be willing to take such a big risk tells you how dire the situation is,” Mawii said.