surge pricing

Online cab aggregators Ola and Uber have ‘temporarily suspended peak and surge pricing’ in Delhi NCR, following Delhi government’s announcement that it would take strict action, including impound cabs and cancellation of permits, against those who would flout government rules. Note that Karnataka Government has already impounded some Ola and Uber vehicles for charging their users over the government decided rate of Rs 19.5/km, after banning surge pricing in the state.

Key takeaways from Uber’s statement

Surge pricing = cars available on the road: Uber sent out a press statement by Gagan Bhatia, its general manager for Uber North (India) stating what it has been saying all along: Surge pricing kicks in when demand exceeds supply, and ‘maximises the number of trips and minimises the number of people stranded.’

92% trips happened on regular fares: Uber then claims that 92% of the trips in Delhi (timeline not mentioned) took place on regular fares, including during 1-15 January 2016, when the odd even scheme was first implemented.

Uber users need to ‘type out the surge multiplier’ to confirm surge pricing: The company then mentions that the app notifies ‘every customer in big bold images in text..and has to type in what the multiplier was to double confirm’ the agreement with surge pricing to take a ride. This seems like a feature only accessible in Delhi, because in other cities, we’ve never had to type out the multiplier to confirm accepting surge pricing. For a user in any other city, and I suspect Delhi as well, it works like this: “Set pick up location” → Surge pricing, Fares have increased to get more Ubers on the road with 2 options: “Notify me if surge ends” (We’ll let you know if rates at this location drop in the next 30 minutes) and “I accept higher fare” (Request Uber).

No surge pricing = no choice: It states that its users have the option to not take a cab in surge pricing, but not providing surge ‘means that citizens don’t have an option’, and ‘(is) saying we should be just like a taxi and be unreliable when people need us most.’

Interestingly, surge pricing is not active across all areas of a city when it kicks in. Uber drivers tell me that during peak office hours especially (7-11AM and 6-9PM), surge pricing almost always kicks in, due to a higher demand.


Ola’s statement

– Unlike Uber, Ola took a friendlier approach to the situation by stating that it has temporarily stopped peak pricing in Delhi NCR to “support the government’s odd-even initiative.” However, Ola should note that even after the odd-even scheme, the government will impound vehicles like it said it would, if found flouting government norms. This may be a temporary solution, but a larger challenge lies ahead, post 30 April.

– It has also initiated a campaign where its volunteers talk to users at traffic junctions, metro stations and high footfall areas about the benefits of ridesharing.

– Ola claims that since September 2015, it has dealt with demand only using CNG vehicles. It currently has 26,000 CNG vehicles on the platform, but does not say if these are in Delhi NCR or across other cities.