Thumbs down to new central cab aggregator guidelines

Cab aggregators are said to be dismayed over the price cap introduced in the Union government’s guidelines, though the base fare will depend on the Wholesale Price Index (WPI).

Both Uber and Ola refused to respond to the guidelines introduced on Friday by the Union Road Transport and Highway Ministry to formalise the aggregator cab sector, which hitherto had different sets of rules in various states.

“The initial feeling in the companies is that they are not happy for sure,” revealed an industry source. “Even if the WPI would account for the rising fuel costs, aggregators are worried about the limits on surge pricing. There are also concerns about additional responsibilities since they now have to take care of the drivers on
their platforms.”

Fixing fares has been a contentious issue in Karnataka, where the state government notified fares in 2018 based on class (price) of the vehicle, with sedans attracting higher prices and hatchbacks slotted into lower fares.

While the base price linked to WPI may result in higher passenger fares, it will limit the profit margins of the companies.

Surge pricing remains the best mechanism for them to make profits. The industry source pointed out that the increased base price may discourage customers from using aggregator services.

Mixed impact

Ujjwal Chaudhry, Associate Partner Consumer Internet at consulting firm Redseer, said the guidelines will have a mixed impact. "It is positive in terms of formalising the sector as well as increasing the consumer trust on aggregators through improved safety regulations,” he said.

“But the overall impact of these guidelines on the ecosystem growth would be negative. Capping surge and platform fee would reduce the earnings of five lakh drivers, besides resulting in increased prices and higher waiting time for 6.8 crore customers using it for commute needs,” he added.

Added responsibilities for drivers

Meanwhile, the aggregators have been directed to install a panic button and GPS tracking devices in the taxis, a rule they resisted in Karnataka for three years.

The new guidelines have also added a fire extinguisher and manual overriding of the central locking system as additional directions.

The guidelines have also gone a step further by asking aggregators to ensure that drivers on their platforms have health insurance of "not less than" Rs 5 lakh and a minimum term insurance of Rs 10 lakh with a 5% increase each year.