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| Edited By: |Source: DNA |Updated: Oct 27, 2018, 07:00 AM IST
The ongoing strike by drivers of Ola and Uber in Delhi and Mumbai has inconvenienced thousands of commuters. But this disruption was bound to happen sooner than later. One of the causes for agitation is rising fuel prices, which has eaten into the earnings of the drivers. But the other, more important, cause for anguish has been the cab aggregators' systematic whittling down of incentives for drivers and forcing them to operate on thin margins. The cab-hailing firms are answerable to investors who are now demanding that the companies cut losses and post profits. This year the average cost of rides has shot up by 15 per cent nationwide — over and above the 10 per cent increase in 2017, according to research & advisory firm RedSeer. But, it hasn't benefited drivers.
On the contrary, their incentive per ride has gone down from 60 per cent of the booking value two years back to 14-15 per cent now. Drivers have to put in between 8 and 12 hours to take home anywhere between Rs 1500 and Rs 2500 per day. For the owner-driver, his gross earnings of Rs 45,000 to Rs 75,000 may look high, but after paying for fuel, maintenance and car loan EMI — the third component being the highest — his net earnings become pretty low. And now with the incentives gone, no wonder, the protesting drivers feel cheated. Yet it was a dream start when Ola and Uber launched operations in India in 2010 and 2013 respectively. In the beginning, drivers were promised earnings of Rs 1 lakh per month. Such glittering prospect of earning inspired many people to give up their jobs and enrol for Ola and Uber, which didn't employ these people. Thousands bought cars on loans in the hope of maximising their earnings.
In the process, Ola and Uber managed to disrupt the business of kaali-peelis. Ordinary taxis in Mumbai are now a dying breed, despite not pushing for a revised fare for fear of losing even more commuters to cheaper aggregator cabs. In the beginning it was felt that Ola and Uber revolutionised the transport system since they offered comfortable, air-conditioned transport at rates that were often cheaper than ordinary cabs. For the price-conscious consumer, this was god-send, so to speak. In the last couple of years, the scenario has changed altogether. Tens of thousands of drivers have left these internet platforms because of sustainability issues and many more are expected to withdraw their engagement with Ola and Uber in the coming months.
After having captured the market, the service providers are calling the shots. What's more is that disgruntled drivers in Mumbai want the state government to start an taxi aggregator app on the lines of the private ones they work with. In the midst of all this, the consumer has suffered the most. One had to shell out as much as Rs 700 for a 5-km trip. The gig economy disrupts markets and incumbents but doesn't create sustainable business models.
