Discount by new players irks entrenched firms

Discount by new players irks entrenched firms

Discount by new players irks entrenched firms

A  tussle is currently on in the airport cab sector between government-regulated taxi companies like

KSTDC, City Taxi, Meru cabs, EasyCab and a few new private taxi companies like Megacabs, Olacabs and the premium service San Francisco-based American Uber taxi company. The Bangalore Taxi Tourist Owners Association has lodged a complaint against the new taxi companies including the American one with the Transport commissioner that the disco­unts and fares per km being charged less than government-stipulated ones. They are not legal and underpricing would kill the domestic, local cab sector, the Association says.

While the government-fare taxis which includes the city taxis, KSTDC taxis and Meru cabs and Easycab charge passengers government-fixed fare per km, the new private private taxi companies like Megacabs and Olacabs and Uber offer discounts on the government fare, which long-time local cab owners and drivers say will kill the Bangalore airport cab
sector if allowed to proliferate. In simple terms, if an airport trip costs approximately between Rs 650 to Rs 800 per trip from the city as per government-fixed fares, the new private taxis including the American one are discounting this price via a discount coupon or are offering

luxury travel almost on a par with ordinary cab travel. What this means is if an airport trip from the city to airport is

Rs 650, after discount, it will be available for Rs 550 by Megacabs. The luxury or premium cab ride in Uber taxis is available at a steal of just Rs 80 as base fare, additional Rs 18 per km and Rs 2 per minute. Note here that the non-discounted cabs charge Rs 80 for the first four km and the government-fixed Rs 19.50 for every kilometre after that. But the premium cab ride is costing Rs 1.50 less per km (at Rs 18 per km though it should have been Rs 19.50 per km.) The cab company that is offering a discount of Rs 100 via coupon does so after charging passengers at the government-rates. Both ways, the taxis like KSTDC, city taxi and other taxis which charge Rs 19.50 per km and don’t offer any discount are bound to lose business and passengers.

When this paper sought the reaction of the company offering the Rs 100 discount via a coupon, Megacabs, its spokesperson said: “”It is true we are offering a discount of Rs 100 from the airport to the city via a coupon that the passenger has to ask the driver to give. This discount is only a promotional offer and will run until December, after which we plan to charge normal rates.”

The American company Uber was not avaliable for comment, but its base charge of Rs 80, Rs 18 per km is as good if not better than the private non-discounted cabs, with the only difference being its per minute charge over and above the base fare and per kilometre charge. Their charge in a luxury cab amounts to only 25 to 30 per cent more than regular Meru cabs which are non-discounted and non-premium. A one hour’s drive in the premium Uber taxi would cost only around an additional Rs 120. Now, a premium cab service coming at just 25 per cent more than the regular cabs can potentially cut business and passenger flow to regular cabs, triggering conflict, price war and tensions between cab companies. Apparently, the company had begun with a base price of Rs 150 and per km fare of Rs 20, but not finding takers, cut it down to Rs 80 and Rs 18. This discounting is possible because the company is heavily funded and backed by Google, Menlo, Goldman Sachs and other investors from whom it has raised over 300 million USD. The company has presence in more than 35 countries including top capitals London and Paris.

The Taxi association told Deccan Herald that the discounted fares have even impacted the BMTC Volvo service. “Volvo buses had a good number of passengers originally, but after the discounts and after premium cab rides have become more affordable, more people are shifting from volvos to cabs. BMTC is doing its best and the service is comfortable. The government should protect it. A discounted service over a long time will kill competition.

Naturally the long established cab system at the Bangalore airport would be hit if the discounts continue.

We can’t face upto multi-nationals who are shoring up these private companies with huge cash reserves. We are aware of the identity of the companies. We will wait to see how government acts on our petition to the transport commissioner.”

When asked about the discounted fares and per km fare being charged less than that fixed by the government,Transport Department official Maruthi Sambrani, Joint Commissioner (South, Enforcement, told Deccan Herald that the department is acting on misuse of permits and not discounted fares. “If a cab with state permit is authorised to ply between Bangalore and Tumkur, the cab cannot use that permit to operate within the city or between Bangalore and the airport, which requires a special city permit. We are acting against cabs using state permits and then charging Rs 7-8 per km way below the Rs 19.50 per km set by the government to operate between city and airport. We have booked 81 such cases. A special squad has been set up to eliminate cabs under-pricing and misusing permits. As for the discounted fares, if cabs have the valid city permit, then it is an open market situation. If such cabs charge over Rs 19.50, then we act act against them. If they are charging below the minimum fare, we don’t act because its open market - if you want to give a discount, you can. If you can afford to run the taxi below the minimum fare per km, you can. This option is available even to the Taxi association. Can we question all consumer goods companies offering discounts - like refrigerators, TV sets or cell phones? We come into the picture only if the rates are above the minimum. Its upto the cab company. If they make losses under-pricing then they suffer. There is no illegality per se as long as the permit being used is the legitmate one.”

From the passenger viewpoint, while discounts are welcome, it can be argued that fares may not make such a huge diffference to high income industrialists, company owners, technology engineers who spend high for air tickets and who shop duty free in the airports and drink and dine at expensive airport eatouts. Students and parents do reason a bit about the cost, but keeping in mind safety, would not mind cabs taking them to their doorsteps in the dead of the night, when the only thing they experience is sleep, fatigue of travel and looking foward to reaching home quick for good rest. It is likely that this crowd will take to discounts, while the high income groups may not worry over the matter.

Spending over Rs 60,000 to Rs 85,000 for an air ticket to the US, the question can be asked whether a cab fare of Rs 600 would makea difference? There are passengers who argue that the volvo fares are down to earth and are any day a steal over cabs - the difference being nearly Rs 400-500 between the bus and the cab. The volvos charge anywhere from Rs 150 to a maximum of Rs 270. The volvos are a boon for day time travel.

Passengers use volvos in the mornings as they get autos to ply from the bus stand to their homes. Night times, while volvos are relatively inexpensive, there is the worry how passengers can reach home from the bus stand assuming your family is not coming to pick you up.

VASUDEVA RAO, Cab driver:   “Cab drivers in general work very hard.  I know drivers who work 24 hours and return home only at the end of the week. The job is stressful also because of the bad roads and heavy traffic. On an average, we are on the road 14 hours though many toil the entire day as I said. Depending on the company you’re tied to, your stress levels vary. Rest is absolutely crucial for drivers as exhaustion can cause accidents. Only if your health is ok, you can keep the job. I work in the Whitefield area between 6.30  am and 10 pm. I do night trips and very early morning trips too. I focus on resting to keep fit. It’s not easy driving cabs in  Bangalore.”

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