Why high attrition of drivers is no cause of worry for Ola, Uber

One cannot begin to emphasise the importance of cheap taxi fare in a city where the streets are swamped with ‘kaali-peelis’ or the black and yellow taxis. Every morning and evening, during peak hours, if you pause for a look, you’ll see several hands stretched out to hail a cab to the innumerable destinations. The taxis lend life and convenience to a city, so where their fares stay low, the lives of commuters becomes easier. Let’s see some places across the world which have the highest and the lowest taxi fares, according to a study by taxi2airport.com which analysed data collated by Taxi-Calculator.com. (Image: Reuters)

A decline in fleet of Ola and Uber should be no cause of worry for the taxi hailing companies or their users, say transportation experts.

According to research and consulting firm RedSeer, the number of affiliated cars with these two companies has declined by one-fourth of its total strength in December last year. It was reported first by Livemint here.

Jaspal Singh, an auto industry analyst and co-founder of Valoriser Consultants, opined that there is no need to sound an alarm as of now. "The sector already had a high attrition, so even if there is a reduction in the number of cabs it is not going to affect much. If it affects in future, they (Ola and Uber) will increase the incentives again or come up with something else," he said.

The report, citing figures from a market consulting firm RedSeer Management Consulting Pvt. Ltd, says that due to falling incentives for drivers working under Ola and Uber, around 1,20,000 of them have opted out to explore other job options.

"As Ola and Uber claim, they have more than one million registered cabs with them combined but at one point of time only about 35 percent of the associated drivers are active on road. Particularly during summers and holidays, the drivers chose to go to interstate rides," Singh added.

Ola and Uber were left with 3,80,000 vehicles associated with them in the March quarter, from the peak of five lakhs vehicles in December quarter, a sharp drop of 24 percent, the report said.

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However, drivers are clearly unhappy with a fall in earnings. "With 50 percent reduction in base fares and 60 percent drop in fares per kilometre, earnings have more than halved," said Jamuna Das, a driver associated with Uber India. Drivers are unhappy with the ride aggregators as the demand is mostly seasonal with summers being a lean period. Demand for cabs rises during the festive season around Diwali.

Delhi and Bangalore have seen drivers protests this year against falling incentives from both companies. The report also stated a drop at least 5 percent in the number of rides for the drivers, further reducing their earnings.

Incentives, over and above the share in fares, were initially offered to the drivers to lure them to associate themselves with these startups. Now, as both companies are targeting for profits, they have started cutting down on such spends.

Ola and Uber have also started leasing cabs to have a greater control on the demand and supply in the market.

Read also: Not worried about Ola's claims on market share: Uber