Odd-even policy has Uber and Ola pitted in a price war

  • Sunny Sen, Hindustan Times, New Delhi
  • Updated: Jan 19, 2016 09:43 IST
Ola Cabs – the homegrown taxi-aggregator rival to Uber — is also offering a flat discount of Rs 49 for four kilometers. (Mint Photo)

The trial period of the odd-even scheme is over and NCR resident Santosh Prasad, who has an even number car, can drive to work every day now. But he doesn’t mind sharing a cab more often than before.

The reason is a message he got from cab service Uber early on Monday morning: “Get 25% off on all Uber rides across Delhi NCR this week. That’s almost Rs 5 per km.”

He used to ride Uber every alternate day during the odd-even scheme and the app has him hooked now. The discounts only help. “I was using UberPool (the taxi aggregator’s shared taxi service). With 25% off, I will not share the cab. It comes down almost to the same price,” Prasad said.

Ola Cabs – the homegrown taxi-aggregator rival to Uber — is also offering a flat discount of Rs 49 for four kilometers.

These discounts make cabs a comfortable and economical way to fight the bumper-to-bumper traffic for NCR residents.

Accordingly, cab companies saw cab booking go up by 25-30% during the odd-even days, sources said. Meta-search app Ixigo Cabs, which aggregates inventory of Uber, Ola and others on its app, saw a 25% surge in demand during the 15-day period.

During the odd-even ban, all cab aggregators added their capacity to serve more customers. But adding capacity has its own fallouts. “When supply is added, it is important to sustain the supply. The consumer should see a huge service benefit rather than the discounts. So, I don’t think discounting is a sustainable model. In the long run, neither the inventory nor the discounts can create a sustainable business model,” says Sakshi Vij, executive director of Carzonrent, which runs the taxi service EasyCabs.

Ola and Uber declined to comment on the price war and capacity addition. But in an earlier conversation, Anand Subramanium, head of marketing communications at Ola Cabs, said the taxi aggregator would add capacity as a part of an ongoing process to serve more customers.

For Aloke Bajpai, CEO and co-founder of Ixigo, discounting is not something that is new in the cab booking space. But, here we are talking about additional discounts.

“It is more of a stimulation of a market, as all taxi service companies have added new customers,” says Bajpai, so, there is “new marketshare to be fought for.” OlaCabs, through TaxiForSure which it acquired for $200 million last year, is also giving discounts.

One reason Bajpai cites is the introduction of the cab sharing feature. “Both these apps have introduced car pooling as a new feature. They have to have a strong hook to bring them back to the app. They need to get more people to discover the feature,” he said.

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