Double whammy for Ola, Uber as Centre and Delhi make laws tough

The Delhi government will not allow surge pricing and fix a maximum fare cap for app-based cab aggregators such as Ola and its American rival Uber.
Ola and Uber were criticised for using surge-pricing during the Delhi government’s odd-even road rationing scheme in April.(Sonu Mehta/HT Photo)
Ola and Uber were criticised for using surge-pricing during the Delhi government’s odd-even road rationing scheme in April.(Sonu Mehta/HT Photo)
Updated on Aug 11, 2016 12:50 AM IST
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Hindustan Times | By, New Delhi

The Delhi government will not allow surge pricing and fix a maximum fare cap for app-based cab aggregators such as Ola and its American rival Uber.

These measures are part of a policy that the Aam Aadmi Party government is preparing, following directions of the Delhi high court. The proposals will be sent to the lieutenant-governor for approval.

“The government will fix the rates and cabs will charge within the limit,” transport minister Satyendar Jain said on Wednesday. “If there’s a law for autos and taxis, Ola and Uber cannot be above it.”

The policy will be in line with the amended motor vehicles law the Union cabinet approved a week ago.

Surge pricing is a demand-based model that makes fares fluctuate, sometimes more than five times the base value. Ola and Uber were criticised for using the model during the Delhi government’s odd-even road rationing scheme in April.

Besides, all taxis must install fare meters. App-based taxis rely on the GPS in the driver’s phone to calculate the fare. A government study shows Ola and Uber fares were inflated by poor mobile network as cell phones often connect to a tower far from the pick-up and drop-off points.

The amended motor vehicles act is expected to create a level-playing field, bringing cab rental companies such as Meru and Carzonrent-owned Easy Cabs back in action. These firms were pushed aside as Ola and Uber offered heavy discounts to passengers and doled out incentives to drivers.

“The discounts and incentives are not sustainable … Hopefully, there will be some clarity. It is unusual to start a business in a country without complying with the laws,” said Rajiv Vij, the CEO of Carzonrent.

In the new regime, Ola and Uber will have to take an aggregator’s licence and follow taxi rules of every state. In Mumbai, a licence holder cannot have more than 4,000 cabs, and 2,500 in Delhi, and all taxis should run on eco-friendly CNG.

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Tuesday, January 25, 2022