Online cab booking | Why finding a cab is a nightmare now

Both Uber and Ola are currently facing the ire of customers in India for random surge pricing. (Representative Image)

It’s a common complaint in large Indian cities — one simply can’t find a cab anymore. Even if one does, it can be a nightmare.

The complaints include longer wait times, poorer service, and a high number of cancellations. Many times, the driver asks riders to cancel the trip on the ride-hailing app and offers to drop them for the displayed fare.

Once seen as an alternative to owning a vehicle or figuring out a less-than-ideal public transportation system, a door-to-door trip in an AC cab that was timely and affordable seemed like the perfect solution — until it started to fail. Now, it’s a question of looking for rides on multiple apps, asking drivers not to cancel, or having to pay in cash.

Even drivers on cab platforms had a dream run for a few years, with high incentives, low commissions payable to the platforms, and the ability to set their own hours. What slowly started unravelling before the pandemic accelerated has now led to drivers getting disgruntled, with those still in the system trying to find loopholes to get by.

What went wrong?

Several drivers told Moneycontrol that the rise in commissions to 20-30 percent of the fare and the increase in fuel costs, among other expenses, made it impossible to make do in the once-lucrative profession.

Drivers used to make up to Rs 1 lakh a month before 2017. Now, the very incentives that made driving for ride-hailing companies so attractive are pretty much non-existent, drivers said.

Fewer cars, lower earnings

Ramesh (name changed), a driver in Bengaluru for Ola and Uber, averages about 14 hours a day, 25 days a month. He spends over Rs 20,000 a month on fuel alone. According to him, fuel costs have doubled and he only gets incentives on the weekend, when there is increased demand. He had paid off the loan on his car just before the pandemic and was lucky on that front because he had been considering purchasing another one.

Even without a loan to clear, Ramesh said driving for ride-hailing apps is unsustainable currently and takes on other tasks.

While Ramesh continues to drive, numerous drivers have sold their cars or defaulted on loans during the pandemic, and/or have returned to their hometowns after their vehicles were seized.

“Grassroots organisers have indicated a sizeable reduction in fleet sizes of Ola and Uber compared to pre-March 2020. There are numerous possible reasons for this,” said Aayush Rathi, a senior researcher at the Centre for Internet and Society. “One is the cost-of-living crisis in urban India that has solidified the reverse migration of the early Covid days. Then, the so-called moratoriums on loan repayments ended up increasing the total liability on drivers. Many drivers may have sold their cars or defaulted on loan payments.”

A paucity of data hinders the ability to get an accurate picture of the depth of the problem of shrinking fleet sizes. There are estimates, but it's impossible to get a granular understanding because the companies do not release this data. In addition, drivers say that many of them returned to their hometowns during the pandemic and have not returned.

Driver decision-making

A significant shift in both apps is that drivers can now see the destination and mode of payment when a ride request comes in, two of the most cited reasons for trips getting cancelled after getting accepted. These two factors now play a key role in determining how a driver chooses trips.

“I can decide what’s good for me. My preference is long drops – a bill of Rs 200-300 or even more. I don’t want Rs 50-60-70 drops. Now, I can see the drop location and I can plan my day. I will only pick the roads and areas that I am familiar with,” Ramesh says.

Rahul, who took to driving a taxi in Bengaluru after getting his degree and not finding jobs during the pandemic, agrees with Ramesh.

“I don’t accept short rides of 3-4 km. You can’t even recover the cost of diesel from these rides,” he said. Rahul’s name has been changed on request.

It all depends on the driver’s mindset, said Shaik Salauddin, national general secretary of the Indian Federation of App Based Transport Workers (IFAT).

“One might think that they’ll only take short distances inside the city to get incentives faster. Others may look to make money on longer rides as shorter city rides may ruin the car faster too,” he said.

Another reason drivers often cancel rides is when they have to travel 3-4 km to pick up the rider, for which they do not get paid, Salauddin said.

Non-cash payment is a widely cited reason for cancellations, especially now that drivers can see the mode of payment before accepting a ride. Rathi of CIS said weekly settlement cycles and outsourcing of all fixed and working capital requirements to drivers have made it difficult for them to set aside enough money to meet their day-to-day expenses.

“The preference for payment in cash is a result of this and is an important determinant in their choice of customers,” he said.

Air-conditioning, too, has been a point of contention between customers and drivers who refuse to turn it on or charge extra to do so. Rahul says that while the app’s per-km fare may be decent, it doesn’t account for all the time taken to complete a trip.

“If we are stuck in traffic for a very long time, we do not get paid. Customers tell us to put the AC on or increase it, but they don’t realise it consumes more fuel for us. They complain to the company,” he said.

Another complaint is drivers asking customers to cancel the ride on the app and pay them the fare displayed, which includes the commission. Rahul agreed and said several customers refuse when he makes them this offer. But if a customer travelling to the airport agrees to pay him the full amount, it could mean an extra Rs 300 in earnings for the day.

Income supplements

These substitute measures have become a requirement for drivers. The gig economy started off as a way of giving workers the freedom to choose their hours and the type of work they wanted to do. The ride-hailing apps were able to attract a large number of people, giving them a strong base of drivers to cater to customers in a short time. However, having only one source of income was a body blow for drivers in terms of earnings and livelihood.

Ramesh is sometimes called by a tech company to drop employees. He logs off the app and takes up that gig. With extra gigs, he makes Rs 30,000-35,000 a month, he said.

Another fairly common practice before the pandemic was for people to buy several cars and lease them to drivers. The drivers paid the owners a fixed amount or a percentage of earnings, a model that worked when ride-hailing promised lucrative earnings.

Amit, one such driver in New Delhi, has now taken on other jobs to sustain himself because these cars simply aren’t available anymore.

“People who had 5-6 cars sold them. Many people’s cars were seized by banks for not being able to pay the EMI. Several people who used to work as drivers in such set-ups have taken on call centre jobs or other delivery jobs. I do food delivery on the side as well. If I get a car, then I drive. I used to split my earnings 50:50 with the owner after expenses, but there was no work after one point,” Amit said.

Amit said people leave if they can’t make Rs 20,000-25,000 a month after expenses.

“Even if you become a driver for a family, you will earn Rs 20,000. On the other hand, if it’s your vehicle, you put CNG in it, you drive for 14 hours and even then you hardly make Rs 15,000, then what is the point? People who are not very pressed for money are continuing to drive,” he added.

Several drivers are part of informal groups on WhatsApp or Telegram where information on smaller jobs is available – like working for a family or quick outstation trips – and they can make some additional income without having to wait for the next ride.

Other avenues

The need for assured rides or stability in earnings has pushed many drivers to cab companies such as Meru. According to Kannan Chakravarthy, CEO of Meru Cabs, the post-Covid market now has a lack of experienced drivers as most of them have switched professions.

“As a result, vehicle quality has gone down and subsequently, the type of drivers has also gone down,” he said, stressing that customers are now focussing on safety.

City-to-airport travel has increased four-fold, he said, especially in Bengaluru and Hyderabad. From a driver perspective, Chakravarthy said most drivers on the platform are over 35 and “prefer constancy over high risk.”

He said driver stickiness to the platform is about 80 percent, with the others switching between apps and gigs. Driver earnings have recovered to 80-85 percent of pre-Covid levels. The company even expects profitability at the operating level by the end of the year.

Drivers who move around, depending on the earning potential of a gig, have been taking on work in other verticals as well.

B2B gig marketplace Taskmo cofounder Prashant Janadri said several of these drivers are graduates or are tech-savvy to a certain extent and they are placed in other delivery fields and even as sales executives.

Janadri said most people on Taskmo looking for gigs are not on the app for their primary source of income.

“We have seen people from the auto/cab/taxi driver kind of segment work for some time in a day, but we are not their primary income source,” he said.

However, he pointed out that the staffing requirements of ride-hailing companies have soared. Janadri said prior to the lockdown, companies required 5,000-10,000 drivers. In the past year, this number has shot up to over 100,000, he said, with Taskmo even re-onboarding drivers who left the platforms.

Pravin Agarwala, founder of blue-collar staffing and HRMS company BetterPlace, said demand for drivers from IT companies hasn’t picked up and is nowhere near pre-Covid levels. In terms of demand, Agarwala said transportation is one sector that is yet to recover for blue-collar workers, whereas logistics, e-commerce, retail and BFSI have all seen a surge in demand.

Elusive profitability

Companies have steadily increased commissions collected from divers amid a fall in revenue due to the pandemic, but ride-hailing has so far proved to be unsustainable as a business.

In 2020, Uber’s delivery was larger than its ride-hailing division, based on adjusted net revenue. In its results announced in May 2022, Uber’s delivery business continued to hold up with $2.5 billion in revenue reported from mobility as well as delivery. Last month, Bloomberg reported that Uber explored the sale of its India ride-hailing arm, which CEO Dara Khosrowshahi has vehemently denied.

Uber’s primary India competitor Ola incurred a loss of Rs 328 crore from the ride-hailing business in FY21. It burned its hands aiming to get a piece of the delivery pie and has so far shut down quick commerce business Ola Dash, cloud kitchen business Ola Foods, and previous food delivery attempts with Ola Cafes and Foodpanda. It also shut down its cars business and has said it’ll be focussing on the electric division and increase investments in electric cars, cell manufacturing and financial services.

Queries to Uber and Ola went unanswered.

CIS researcher Rathi said an immediate solution would be for companies to revamp their rate cards by reducing commissions and penalties.

“The rise in consumer and driver grievances has showcased the inherent unsustainability of the gig economy model itself. None of these issues crop up in a situation where drivers are hired – not temporarily contracted – are supplied with cars and have social security entitlement to soften the blow of economic upheavals,” he said.

It appears to be a lose-lose game, with companies incurring losses on these divisions while drivers barely make enough to scrape by.

Full circle

Ride-hailing was once seen as a way for drivers to make more money and get greater freedom. Now, they are coming together to try and form unions and demand that governments ensure social security for them.

“A majority of the work that you see on Indian platforms is actually employment being masqueraded as some kind of freelance work in order to circumvent basic labour protection like social security benefits or monthly minimum wage and things like that,” said Rikta Krishnaswamy, coordinator of the All India Gig Workers Union in the National Capital Region.

There have been attempts at this, with the yet-to-be-implemented Code on Social Security seeking to offer protection to gig workers. In September, IFAT filed a public interest litigation in the Supreme Court contending that the failure to register gig workers as unorganised workers and provide them social security was a violation under Article 21 of the Constitution.

“We’ve come full circle almost in a period of 10-15 years,” said Krishnaswamy, where the rhetoric has changed from saying that people will make a lot of money, which isn’t necessarily true.

“The demand has gone beyond basic asks such as regulation of the company and has reached the level of asking the state to create alternative gig infrastructure,” she said.