Striking drivers in Bengaluru, Hyderabad or elsewhere all have the same complaint – too many cabs and not enough income.

The end of big money dreams How cab drivers are fighting a losing battle against Uber and Ola
news Cab Aggregators Wednesday, January 25, 2017 - 13:41

Mohammed Umayullah became an Uber driver in 2013, when the service was launched in Bengaluru. He, like many others, was drawn to the attractive incentives on offer that let Uber draw in a large number of drivers in virtually no time.

Back in 2013, all that drivers were required to do was complete a pre-determined number of rides to gain incentives offered by the company. “I would easily make Rs 6000 after 12 rides,” recalls Mohammed, while speaking to The News Minute.

But in 2015, the company changed its incentive policy, with drivers now having to earn a target amount to obtain the incentives on offer.

“Earning was easy back then. Drivers did not have to put in as many hours as we currently do. I could easily make Rs 15,000 in a month with 8-10 rides per day. I now have to drive almost all day to earn the same amount,” he says.

With more drivers, there are less rides and less incentives coming his way. “I drive from 6am to 10pm, and my brother takes over after that. And with the increase in the number of cab drivers, it becomes difficult to get rides the way we used to.”

Mohammed was among the driver-partners of the Ola, Uber and TaxiForSure Drivers' Union who protested on Monday against the cab aggregators, demanding that the companies follow the flat rates approved by the government. The drivers protested all through the day at Bengaluru’s Freedom Park and threatened to intensify the agitation, if cab-aggregators did not respond within three days.

For the drivers in Bengaluru, a major irritant is the fixed amount for rides from the airport to any part of the city. Ola charges Rs 399 for any trip from the airport, while Uber charges Rs 325.

“This is the worst thing that has happened since changes were made in the incentives. Out of the Rs 399 earned, we need to shell out Ola’s commission fee and an additional amount for service tax. This is apart from paying Rs 120 at the toll plaza. In the end, we are literally left with nothing in hand,” points out Mahesh Lora, a 29-year old driver who works for both Ola and Uber.

Drivers also allege that Uber charges more than the prescribed 25% commission fee for payments made through PayTM payments.

“Day before yesterday, I drove a customer from Malleshpalya to the airport. The fare was Rs 1100 and payment was made through PayTM. I was supposed to receive around Rs 800, but got only Rs 700. This is not the first time this has happened. And whenever we ask them about it, they come up with reasons we don’t quite understand,” says Gopalkrishna Reddy, a 37-year-old driver for both Ola and Uber.

According to the drivers, these additional deductions – apart from the mandatory 25% commission fee – are made without prior intimation. They insist that around 35-40% of the amount they earn gets deducted in this manner, leaving them with just a paltry sum in hand.

“Initially, I thought only 25% was deducted, but in reality, we lose more. For a target of Rs 375, I have to make six to seven trips, mostly in the morning and afternoon. Uber pays Rs 900, inclusive of fuel charges. If drivers are expected to attain targets of say Rs 1,900, for which we are paid Rs 5,200 per day, we need to make at least two trips in one hour, and end up driving all day. Such a punishing schedule will simply kill us,” complains Gopalakrishna.

The cab aggregators, however, do not seem to believe that there is any major cause for grievance for the drivers. Replying to TNM’s queries through email, an Uber spokesperson had this to say:

“We strive to be a mobility option for everyone in Bengaluru and we regret the disruption caused to our rider and driver community by a small group of individuals. We remain committed to serving the city, ensuring driver partners can continue to access a stable income, while giving riders a convenient, reliable option to get around their city.”

The company also did not intend to have a cap on the number of new drivers hired.

"Uber is a two-sided marketplace where both riders and drivers are our customers. The demand for our products, be it on two, three or four wheels, is only growing. It's why more driver are joining the platform to help us serve the need of our riders and our cities better," said the email.

Pointing out the presence of a Redressal Centre in every city, where driver-partners can walk in and lodge complaints, the official maintained that Uber has also provided a toll-free number to driver-partners for filing of file complaints.

A discussion forum called Uber Samaj where driver-partners and company representatives have discussions every fortnight too was launched in November last year.

The company also clarified that Uber drivers are not bound by contract to drive only for them. They are free to drive for other cab aggregators as well as operate as tourist taxis, as drivers for Uber form the company's consumer base along with customers who avail the service.

Ola, however, did not respond to TNM queries despite repeated efforts to establish contact with officials of the company.  

Business experts say that the drop in earnings is bound to occur as the market consolidates itself. Harminder Sahni – founder of business and financial consultancy Wazir Advisors – believes that the protesting drivers are partly to be blamed:

"Like most people, they too are on the lookout for higher income. But there are bound to be fluctuations in arrangements like these. So if Ola or Uber offers a conditional Rs 75,000 a month, it is obvious that this would not be the case always.”

Harminder believes that though the monthly income may have gone down, the dip is not so drastic that drivers are unable to pay their loans.

Other experts have pointed out that as aggregators move from aggressively conquering new territories to establishing profit margins, the incentive structures and earnings of drivers are bound to change. A report in Firstpost for instance, states that Uber’s fare recovery ratio was just 41%, putting the company at potential losses amounting to $3 billion in 2016.

Quoting sectoral experts, the article argues that Ola and Uber can no longer afford to bleed their revenue model with excessive incentives that were designed to capture customers and drivers in the start-up phase.

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