More than a week after the Karnataka government announced uniform fares for cabs operating under aggregator rules by firms like Ola and Uber, as well as for city taxis (non-app-based city taxis), the Internet and Mobile Association of India (IAMAI) has sought an industry consultation.
Stating that dynamic pricing is beneficial for drivers and customers looking for adequate compensation and enhanced services, IAMAI, which represents the digital services industry with over 600 Indian and multinational corporations, urged Karnataka Transport Minister Ramalinga Reddy "to reconsider and revise the notification to provide dynamic pricing on fares to match supply with demand for ride-hailing aggregator operations".
Also, read: Karnataka government revises cab fares, including Ola & Uber
According to the new fare structure announced by the state government on February 3, taxi vehicles are categorised into three classes based on the cost of the vehicle. Cab aggregators aren't allowed to collect surge pricing from passengers.
"The surprise introduction of flat fares, with no room for dynamic pricing, will have a chilling impact on Karnataka’s mobility ecosystem. We request you to offer the industry an opportunity to consult with you and address concerns that may have led to this move," stated a letter to Reddy by IAMAI's associate vice president & head of public policy Chitrita Chatterjee.
The letter stated that aggregator taxis should not be subjected to identical fares as traditional taxis. "These platforms provide more convenience and facilities to the end customer as well as to the drivers by offering a technology platform consisting of doorstep pick-up, safety features, customer grievance redressal mechanism, GPS tracking, digital payment options, insurance & other enhanced features, which should not be considered equivalent to street ride-hailing," it said.
IAMAI also justified dynamic pricing. "Under dynamic pricing models, rates are set by the platform’s algorithm, which adjusts fares based on several variables, such as time, distance, traffic conditions, and the current rider demand and driver supply. This ensures that driver supply is sufficient to meet rider demand through more strategic matching, especially during peak hours," it said.
The letter claimed that elimination of dynamic pricing severely undermines the livelihoods of drivers who previously relied on the flexibility it provides during peak hours. "This decision not only undermines their income but also discourages them from catering to high-demand periods, potentially resulting in a significant drop in service availability," it said.
"For instance, in bad weather conditions, without flexible pricing, drivers may not be sufficiently incentivised to provide their services, leaving many passengers stranded. We may also witness a larger dip in driver earnings due to higher supply and lower demand during non-peak hours due to the newly notified fares," it said.
The letter further stated that imposing uniform fares also disincentives platforms from investing in differentiated services or sustainable mobility models, thus hampering their ability to innovate and sustainably operate and will act as a significant barrier for new platforms looking to enter the mobility sector.
"This notification will adversely impact the city’s mobility ecosystem and undermine the technological advancements that have been the cornerstone of Bengaluru’s global reputation," it added.
Also, read: Will cab aggregators implement Karnataka government's new fare structure? Stakeholders divided
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