Drivers with Ola and Uber across India are complaining of excessive supply, lowered incentives and declining incomes making it hard for them to pay EMIs.
Drivers associated with taxi apps Ola and Uber have called a strike in major metro cities of India this week as both companies have reduced incentives and fares leading to reduced incomes for lakhs of cab drivers.
Ola and Uber drivers halted work in Hyderabad and Bangalore earlier this week. On Friday, the drivers have called for a strike in the national capital region of Delhi. Shortage of cabs was experienced by commuters even as app based companies introduced surge pricing to break the strike.
“I start work often at 4 am. However, companies such as Ola give just Rs 70 for an 8 kilometre ride. I burn more diesel than I earn every day. Till evening am not able to complete the minimum amount required to earn any incentive. It is becoming a loss making affair for me,” said MP Singh, a driver with Ola Cabs, Moneycontrol spoke to.
The drivers across India are complaining of excessive supply and less demand of cabs, low weekly payments, less incomes of shared rides and very hard terms to earn any incentives. Most of them have bought cars on loans.
Another Uber driver, Moneycontrol spoke to said that with rates such as Rs 6 per kilometre, income has declined. “I used to earn over Rs 1 lakh per month driving for Uber during 2015. However with more supply and lessened incentives and per kilometre rates, my earnings have almost halved,” said Jamuna Prasad, a driver with Uber in India.
Both Ola and Uber witnessed a crackdown by Karnataka government against ridesharing citing it as illegal. In order to spread support in favour of ride sharing both Ola and Uber are running campaigns in support of their service.
“Across India, since the launch of uberPOOL in December 2015, we have saved over 32 million kilometres travelled, over 1.5 million litres of fuel and cut over 3.5 million kgs CO2 emissions,” said an Uber India spokesperson.
Ola is running a campaign in support of ridesharing on social media even as drivers complain of lowered incomes from the service.
There are about 150,000 drivers associated with Uber and Ola in Delhi. “About 50,000 are expected to join the strike today,” said an official of Sarvodaya Taxi association which has called the strike.
Commuters suffered from absence of cabs and surged fares as a result of the strike.
“App based companies were earlier charging us 20 percent commission. Now it has increased to 25 percent. The companies also make the drivers pay service tax of 5 percent than themselves. We have written to the Prime Minister’s Office about complains against app based taxi companies,” said Kamal Rathore, treasurer of the Sarvodaya Taxi Association.
While the influx of foreign capital has killed smaller entrepreneurs in the online taxi aggregation space it has also impacted established offline taxi players. Both Ola and Uber have lowered prices across cities and made the Indian passenger switch to app based taxis. It is imperative that they do not lower incentives for drivers to maintain a steady supply and livelihood.
Thousands of drivers have bought cabs on loans on guarantee of work given by both companies. Ola also runs a model where the cab is company owned and the driver pays a fixed fee per day for many years.
With lowered incentives, hiked commissions, taxes and more supply of cabs, driver incomes have reduced in past few months. With a constant battle with the state governments and a race to raise more capital, it’s important for app based companies to not ignore the driver who acts as the fulcrum to this business. Hiking fares will also reduce demand for these companies. App based cab aggregators have to maintain a delicate balance between demand-supply and ride fares-driver incentives to not let this business crash in India.