State’s proposal to regulate app-based cabs: Cap on surge pricing, fine for cancellations

Another proposed move is related to the cancellation charge. This will be 10 percent of the total fare or a maximum of ₹100, and will be credited to the passenger’s account unlike the existing practice of the aggregators pocketing it

MUMBAI: The state government has proposed a policy to regulate app-based cab aggregators by putting a cap on surge pricing, levying a fine on ride cancellations, restricting the profit margin of aggregators and prohibiting them from financing or owning a fleet of vehicles. The policy proposes a cap of 1.5 times on surge pricing in peak hours and a reduction of no more than 25 percent during off-peak hours. Aggregators have to keep their profit margin between five and eight percent from the existing margin of up to 28 percent.

New Delhi, India - March 22, 2018: Hundreds of commercial cars parked near Jantar Mantar due to a strike by the drivers of OLA and Uber Cabs at Parliament Street in New Delhi, India, on Thursday, March 22, 2018. (Photo by Sanchit Khanna/ Hindustan Times) (Sanchit Khanna/HT PHOTO)

Another proposed move is related to the cancellation charge. This will be 10 percent of the total fare or a maximum of ₹100, and will be credited to the passenger’s account unlike the existing practice of the aggregators pocketing it. Similarly, a passenger will have to pay a five percent fine for any cancellation from their side, which will go to the driver. The policy recommends that the fine be up to fivefold in case of cancellation of rides booked to a hospital, airport or railway station.

Based on central government guidelines, the Maharashtra government had last year appointed a six-member panel under retired IAS officer S K Shrivastava to recommend new rules to regulate web-based cab aggregators. The committee held 14 meetings in seven months and submitted its over-100-page report in the first week of January, with 23 recommendations. The committee comprised transport department officers and stakeholders, including representatives of aggregators, taxi and auto rickshaws and passengers. Maharashtra has 14 cab aggregators, including Ola, Uber, Meru, InDrive and BlaBla.

The rules will give the transport department greater control over the fares and their variations fixed by the aggregators. “Although aggregator cab fares are fixed by the Regional Transport Authority, there was no control over aggregators, who would drop fares to any level during lean times and increase them eightfold during rush hours,” said a transport department official, adding that the control of the lean-time rates would make aggregate fares comparatively costlier than taxis. “But even surge pricing will be controlled,” he said.

A member of the committee said that the rules were meant for the welfare of drivers by ensuring that aggregators did not indulge in undue profiteering. “Currently the aggregators keep up to 28 percent of the profit, depriving the drivers of their rights,” he said. “They own fleets and finance the vehicles driven by their drivers and then indulge in unfair practices to exploit them. We have heard many complaints and come across cases of such exploitation. The new rules will restrict the aggregators from owning a fleet or financing vehicles.”

The rules also propose that two percent of the fare be paid to the government for the welfare of the drivers. This amount, to be recovered equally from consumers and aggregators, will be used to fund the welfare board constituted by the state government.

Taking a cue from a recent accident on the Mumbai-Pune expressway where the aggregator driver fled from the spot, the committee has made it mandatory for an aggregator to make alternative arrangements in case of a breakdown in the stipulated time. The regulations have also fine-tuned the rules related to car-pooling.

The officer said that the rules would come into force once approved by chief minister Eknath Shinde, who also heads the transport department. The CM is expected to clear them in a week.