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Surge pricing case: As a competitor we have to challenge it, says Magic Sewa CEO


By Sneha Johari and Nikhil Pahwa

The High Court of Delhi has asked the Government of Delhi to file an affidavit clarifying its position on surge pricing yesterday, Rakesh Agarwal, CEO of MagicSewa told MediaNama. Magic Sewa, which has filed the case, contends that according the Motor Vehicles Act, the government has to ensure that there is no uneconomic competition between permit holders, and their case is that according to law, “they (Ola and Uber) can’t even charge 1 paise less than what the government has notified”. The next date of hearing is 21st of November. Details from Magic Sewa’s petition.

PTI reports that the Delhi High court yesterday appeared to disagree with this contention, saying that ultimately, the consumer is king, and taxi associations cannot contest that consumers should not be given benefit. The court cited the reduction in pricing for 4G services, adding that the state government notification doesn’t say that discounts cannot be given to consumers.

While we’re waiting to hear from Ola and Uber, we did speak with Agarwal about contention, and why he’s filed this case.

Notes from our call with Agarwal:

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  • Killing the business of traditional public transport: “By giving discounts and charging lower fares, they are killing the business of auto drivers, kaali-peeli taxis and other forms of taxis. On the one hand they are giving discounts, but to recover the losses they are indulging in surge pricing. This amounts to manipulation of fares in order to make up for losses. I don’t have any objection to that, because that could be a marketing strategy, but legal issues aside, they are losing on an average more than 50% money on every ride, to capture a larger share of the market. As a competitor we have to challenge this. We also have a way of challenging it before Delhi HC, instead of Competition Commission of India (CCI), because CCI takes a year and half.”
  • Surge pricing continues, defying court ban: “They said they’ve stopped surge pricing, and we argued that they haven’t. On the 21st of August, the Judge had said in the order that after the 22nd of August, they cannot overcharge. On the 24th of August, I sat in an Ola cab and I was overcharged. Against the official price of Rs 12.5, I was charge Rs 17.80. This is roughly equal to around 42.4% over-charge.” Note that a couple of days ago, a MediaNama team member paid Rs 280.26 for 17.98 km, which amounts to Rs 15.58 per km
  • On different schemes for taxi cabs: “My worry is that the central government has prepared its own model scheme which a state government can adopt. Delhi Government has prepared one, and they were about to put it in the public domain for consultation, but they haven’t. The High Court has constituted a committee too”…”(Cab aggregators are not the same as traditional taxi operators) because traditional taxi operators usually own the fleet or they have contracted vehicles. These companies are nimble, agile, and they are acting only as an agent, and they are taking bookings under their own brand. Eventually it is they who are responsible for Quality of Service. That is what the passenger thinks. My concern is that the government has this habit of having a policy only for Cabs. What about two wheelers and buses. Will they have a separate schemes for different types of vehicles? I think the government should have one single policy of transport services, independent of vehicles.”

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