Ola drivers protest, return back cars citing low income

Priyanka Sahay

Moneycontrol

A group of Ola and Uber drivers in Delhi and National Capital Region (NCR) have alleged that the online taxi aggregators are giving preference to the cabs that have been leased by them compared to those attached directly by drivers.

The protesting drivers have alleged that these app based taxi aggregators do not require to give minimum business guarantee to the drivers who take the cars on lease and thus it massively reduces their cost of operation unlike the attachment business.

The two cab aggregation service providers launched their leasing business last year. Under this, Uber and Ola lease cars to drivers for a security deposit and a daily rental. In the attachment model on the other hand, the minimum business guarantee to drivers, increases the cost of operation.

This led to massive protests outside Ola office in Gurgaon last month, where a few drivers spoke to Moneycontrol regarding the practice. According to an Ola driver, who requested anonymity, about 250-300 drivers had returned their cars across Delhi-NCR citing low income.

Ola didn't respond to an email. However, a senior company executive who spoke on the condition of anonymity said that even though there wasn't any merit in the allegation of the drivers, it’s true that the drivers who ran leased cars didn't get minimum business guarantee. The Ola executive, agreed that the cabs have been returned however he said that the reason were 'not solely limited to income'.

Ola leases cars to drivers for a security deposit ranging between Rs 20,000-25,000. The drivers are then charged Rs 800-935 per day. It is almost the same model which Meru Cabs and Mega Cabs applied before arrival of Ola and Uber in India.

The Ola executive quoted above also said that it completely depends on the drivers of how much money he can make on the basis of number of rides. Excluding the rental and everything, a driver easily makes around Rs 17,000-20,000 per month, he said.

The same is comparatively lower to what the attachments driver earns. The reason is that the cost to the consumer is same for both the businesses, but in attachment, drivers get incentives by the online taxi aggregators, funded by big investors."The move to give preference to the leased cars is also to give more duty to these drivers so that they don't think that the work flow is low," said a driver attached with Ola. The move by Ola is an indication to control its cash burn, even as it in talks to raise another round.

In an email response, an Uber spokesperson said, that the company matches riders with drivers using the algorithm in real time and "There is no question of human interference over the match." The spokesperson also denied that the minimum business guarantee was limited only to the attachment drivers.

In the high competitive market, both companies have tweaked their business models. While initially minimum business guarantee was given to the drivers done on the basis of the number of rides, it now also depends on the revenue earned.

Leasing is an important part of the business of the two companies. It not just helps them increase the supply but also ensures exclusivity of the drivers. Currently, the attachment drivers can use both Ola and Uber to get more customers.

Uber Inc has invested at least Rs 43 crore in Xchange Leasing India, between January and March this year. Uber has partnered with Xchange Leasing for its leasing business.

Ola too had earlier said that it would invest Rs 5, 000 crore towards cab leasing business.

Clearly, as drivers income fall, more cars are likely to be returned which might shrink Ola's fleet unless it provides more duties and incentives to cab drivers, some of whom were earning as high as Rs 50,000 per month, till last year. 

priyanka.sahay@network18online.com