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Why drivers sometimes get less than 50% of what customers pay for Ola Share and UberPOOL rides


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by Apurva Venkat and Shashidhar KJ 

“That is not your bill at all, you should not look at it at all. Even if we assume that one booking has a bill of Rs 1000, you will get only the amount for the distance your car has run according to Micro cost card. Your operator bill has been made according to your cost card, not that of the customer,” an Ola driver-care executive named Amit (name changed) said in a call with driver Umang (name changed).

Umang had called in to check on what he thought were discrepancies in earnings on Ola Share. He said that he had taken three Ola Share rides from different parts of Mumbai – from Breach Candy to Hiranandani Gardens to Thane – but earned only Rs 533 on the trips. However, the bookings on the customer’s side amounted to Rs 1,250.

In the 20 odd call recordings sent in by Ola and Uber drivers and reviewed by MediaNama, Umang’s recording shed light on how ridesharing services, such as Ola Share and UberPOOL, work. Over the last couple of months, global publications such as Bloomberg and Quartz have been reporting on gaps between the fare a rider pays and what the driver receives during UberPOOL rides. In India, Ola is Uber’s biggest competitor. Ola Share and UberPOOL are comparable ridesharing services.

The push for ride sharing benefits the environment, the companies, but not the drivers

Both Uber and Ola have made a concerted push to try and get passengers to share rides. A couple of days ago, Business Standard wrote that “uberPOOL in the city helped save 936,000 litres of fuel and 19,901,000 kilometres travelled, thereby curbing 2,203,000 kilogrammes of carbon dioxide emissions in New Delhi”. The story point out how 28% of Uber trips in New Delhi are on UberPOOL. Ola ran a promotion, selling its Share Pass for Re 1, just a few days ago, on World Environment Day. Share Pass offers customers a “more economical fare and also help reduce the carbon footprint in your city!

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While these rides might be cheaper for passengers, and do help save fuel and reduce potential carbon emissions, what’s very clear are two things: both companies tend to make substantially higher income (post driver payments and taxes) from shared rides, and the benefits of shared rides do not get transferred to the driver partners, who – the companies claim, are not employees with a guaranteed monthly income. Many drivers, especially those who have bought cabs on loans, are struggling to make ends meet.

How Ola pays drivers for shared rides

Ola does not consider the three passengers who got in as separate trips, although passengers will be charged separately and the driver will be billed according to his rate card. “We are taking money directly from the customer. The customers bill is not your bill. Your bill is your cost card, which is your operator bill” Amit told Umang.

Umang was under the impression Ola would take a 20% commission on Rs 1,250 and he would be able to keep the rest. “No, it is not like that,” Amit replied. The Ola executive went ahead to explain to Umang that, because he drove a Micro (Ola’s cheapest ride option), he is being paid on the basis of what would have been the billing according to Ola Micro’s rate card, and he would earn a base fare of Rs 44 and Rs 4.80 per km and Rs 1 per minute ride time. In essence, Umang was paid for driving for 50.9 km and for one hour and 27 minutes, and not for the business he generated from the customer. Of the approximately Rs 1250 that Umang generated, Rs 533 was given to him. When he asked about whether the remaining Rs 717 (which is approximately 57% of the billing) went to Ola, the driver customer care executive simply said “Yes.” “Technically, if we see, we, the cab owners, are being cheated. We were operating on the understanding that the company was taking only 20% commission from us”, Umang said, adding that “when we attached the car to the company, we were told something else.”

We’ve verified this billing structure in conversations with other drivers, though Ola hasn’t responded to questions we sent to them: for a confirmation on how drivers get paid for Ola Share, how much they pay, whether Ola offers incentives to drivers for cab-sharing, and whether drivers get paid less when the company does promotional pricing for Ola Share.

How Uber pays drivers for shared rides

“The company earns from all the three customers separately,” Pawan Kumar, an Uber driver told MediaNama. “Say, according to my rate I did a ride of Rs 300 on UberPOOL, Uber will charge between Rs 210 to Rs 240 per customer. In effect, it is earning around Rs 480. [This is] More than what I earn as a driver and more than the commission they said they would take from us,” he added. Kumar explained that on UberPOOL, drivers earn a Rs 44 base price along with Rs 1.50 per minute and Rs 4.80 per kilometer.

Uber confirmed to MediaNama via email that drivers will be paid on a per kilometre basis, but suggested that there’s an added benefit for the driver to use UberPOOL: “With UberPOOL, the driver picks up multiple riders and gets paid along the way by collecting a fare from the first pickup through the final drop-off, eliminating the unpaid period spent waiting for another request and traveling to another pickup location. Thus, drivers are paid on trip distance and time plus a base fare according to their city’s UberPOOL rates. Uber charges a fixed standard service fee of 20% for all rides on our platform in India, irrespective of the city or the type of vehicle (including UberPOOL) chosen by the rider.” Note that the company did not mention that taxes are also applicable over and above this 20% fee, as we had explained in the first part of this series.

Uber also confirmed that customers and drivers are billed differently. “Each pool rider’s receipt shows the charges for their individual trip, while for driver partners it shows the fare from the time of the first pickup to the final drop off,” the spokesperson said. Ola did not respond to MediaNama’s queries on how billing is done for drivers and customers on Share despite multiple emails.

Note that Uber also mentioned that it is offering customers a number of promotions which encourage cab-sharing but said that driver’s earnings will not be impacted. “The cost of the trip for the riders is a function of multiple factors including promotions, the number of people traveling etc, we have been offering several promotions on UberPOOL rides to encourage carpooling. The driver gets paid for the entire trip as per this fare structure even if rider fares are discounted,” it added.

In the call recording Umang sent in, the Ola driver-care executive said that, in case of sharing, he (the executive) was not aware according to which rate card the bill is made for customers. Uber provides riders Upfront Fares for UberPOOL trips, like all other UberGO and UberX trips. ”These are usually up to 40% cheaper than an UberGO trip, whether or not a rider gets matched during the trip,” the Uber spokesperson explained.

“Upfront fares are usually calculated using an algorithm that takes into consideration the expected time and distance of the trip, local traffic patterns, demand and supply at a given location. We’re able to use past data to estimate the likely cost of the trip and can present that price to a rider before they request,” the company added.

Not a new concept

In India, the concept of ridesharing is not new. In Mumbai, auto rickshaw and black-yellow cab drivers in some cities usually get passengers in a fixed pick-up point and charge a uniform fee to all passengers to drop them in different locations in a particular area.

For example, near Kurla station in Mumbai, auto rickshaw drivers charge passengers around Rs 20 each and ferry them to different locations in Bandra-Kurla complex. Typically, an auto rickshaw will be able to ferry three passengers. Thus, the gross earnings per trip for the driver is Rs 60. If the passenger opts for a solo ride, they are charged according to the meter. However, these drivers get to keep a majority of their earnings during rideshares, thus creating a greater incentive for ride-sharing for the drivers, beyond just having lower wait-time.

Earlier this year, Karnataka State Transport Commissioner had termed cab-sharing services illegal, saying that contract permit only allows for picking and dropping from start to destination with no stops in the middle during a single trip. This went against what a committee set up by the Ministry of Road Transport and Highways had recommended, saying:

Sharing of Seats: To provide cheaper travel solutions to the common man and to maximize utilization of vehicles in eco-friendly way, it is recommended that seat sharing should be permitted in the taxis operated by aggregators subject to the express consent of the passengers.”…”With the objective of promoting new forms of public transport, it is imperative that more commercial vehicles and shared mobility assets are added in our cities.”…”This low utilization – high ownership model is unsustainable in the long run and requires a policy intervention to encourage shared cars over private vehicle ownership”

Different pick-up points

In the case of Ola and Uber, drivers need to move to different pick-up locations and often they need to take a detour.

Uber says that costs for detours to pick-up points will be covered by the per kilometre rate card available for Uber Pool. “Since driver partners are paid on trip distance and time plus a base fare according to their city’s UberPOOL rates, they get fully compensated for any detours. In fact, the driver gets paid for the entire trip as per this fare structure even if rider fares are discounted,” Uber said. Ola did not respond to this question.

But drivers say that the per kilometre rate card is not enough to cover their costs. “Cost to driver per kilometer is Rs 4 and in this case we get Rs 4.8 per kilometer eventually. I am earning 50 paise per kilometer. How will we survive?,” says Sahdev Panchal, president of SEWA Cabs, a taxi service which was launched in protest against Ola and Uber.

Also read: As Ola and Uber tweak their incentives, drivers say that it is driving them to suicide

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  • sketharaman

    Great article. Explains the revenue model of OlaShare and UberPOOL products very well. Both are fantastic products and are WIN-WIN for all the stakeholders. While I’ve never taken a pool ride myself, I know someone who does regularly. For a typical trip, non-pool fare is INR 600, pool fare is INR 385. 60% of the time, he’s the only passenger. So, on all those instances, cab company bears the loss but still pays the driver the full contracted fare per rate card. To compensate for that, it’s only fair that the cab company should make more money on the other 40% of the rides where there’s more than one rider. Drivers should stop being greedy – there’s no way they can make cab pooling work without the tech and scale of an Uber or Ola. I’ve heard of a few startups trying cab-pooling in the past. They all failed because, as it’s now becoming clear, cab pooling will work only once the network size reaches a critical mass, which these startups never managed to reach.

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