Ride-hailing company Meru Cabs will now allow drivers to set dynamic fares to attract more commuters, moving towards a marketplace model as it looks to compete in a space dominated by rivals Ola and Uber.
The Economic Times reported that Meru, which currently charges riders as per rates regulated by the government, is launching the marketplace model in the Delhi-NCR area and plans to expand in other cities by April.
How will it work in practice? Drivers on Meru’s platform will be able to decide fares as per demand in the location or the time of the day. On the Meru Cabs app, users will be able to choose from up to 10 taxis whose fares, expected time of arrival, vehicle model and driver ratings will be displayed. The company says that the drivers will be shown a recommended fare calculated by the platform and they can choose to charge higher or lower than it.
*Edit: An earlier version of the article had mentioned that a lack of a cap on pricing may lead to gouging. Meru got in touch with us and has said that the fares determined by the drivers though dynamic cannot cross the government mandated maximum fare.
Company CEO Nilesh Sangoi says that operators have found the previously offered cheap rides unsustainable and fares have now increased across the board, levelling the playing field for companies like Meru. This move will make Meru’s fares more “competitive” and may allow it to be even cheaper than Uber and Ola, he said.
Meru owns half the cars on its platform which it leases to drivers. The drivers agree to a specific number of rides to repay the instalments. The other half of Meru’s fleet comprises cars owned by drivers listed on the platform, a model similar to that of Ola and Uber.
Meru’s battles with Ola and Uber
In October 2017, Meru Cabs had filed complaints against Ola and Uber, alleging that the cab aggregators are misusing their position in the market and prompting anti-competitive practices.
Sangoi had told MediaNama that the company has filed four complaints with the Competition Commission of India (CCI), claiming that Uber and Ola are abusing their dominance in four different cities by burning vast sums of investor funds to distort the market. CCI is a regulatory body responsible for enforcing The Competition Act, 2002 and preventing practices that have an adverse effect on competition in India.
In its complaints, Meru Cabs has raised concerns about Japan’s Softbank being a common investor for both Ola and Uber, and that the investor plans to consolidate these two dominant players in the cab aggregator segment in the country. A couple of months after the complaint was filed, Softbank and its co-investors acquired an 18% stake in Uber.