Sagar Edvankar, a former Ola driver, owes Rs 1.6 lakh to his father, who repaid a part of his vehicle loan in September 2017. With wife Ruchi’s help, he pays Rs 12,000 every month to his father. “If my dad had not intervened, the bank would have seized our house for not repaying the Rs 3 lakh loan. At his insistence, I then stopped driving the cab and took up a nine-to-five job in an automobile company,” Sagar said.
The prospect of driving a private cab was far from a desperate option when he started over year ago. “I would initially make at least Rs 40,000 to Rs 45,000 a month due to the higher incentives offered. By November last year, the profits dipped and I was reduced to earning between Rs 15,000 to Rs 20,000. I could not make ends meet,” he said.
According to official records from the Regional Transport Office (RTO) in Mumbai, the Mumbai Metropolitan Region now has 59,917 tourist cabs. They are used by commuters to go to to work, to the airport or to go out of town. 90 per cent of these application-based rides are operated by Ola and Uber. These cabs now outnumber the old black-and-yellow cabs, or “kaali-peelis”, of Mumbai that total 55,343.
“They captured the market in 2015 due to their low pricing model. At Rs 6 per kilometre for an air-conditioned cab, it was a steal. Drivers were equally excited to participate due to the incentives. The trouble began when the number of vehicles increased beyond the demand,” said a senior transport official.
By November 2016, resentment among Ola and Uber drivers had set in — they were facing low earnings, a strict company policy against the cancellation of rides and immense pressure to do more business. A few protests were also staged by drivers, in a bid to make state government officials aware of the situation.
“Drivers began to realise that the policy model, though profitable initially, would not last for long. A driver with meagre earnings from the business is bound to work both shifts in order to make his monthly loan repayments. Nobody can work under such pressure, and so they quit,” said Raju Patil, leader of the Sangharsh Taxi Chalak Malak Sanghatana, a union of tourist cab drivers.
Between April and September 2017, the city witnessed its lowest registration of tourist cabs, including Ola and Uber – a 66 per cent slump in comparison to the same period the previous year. This was the biggest slump in new vehicle registrations under this category since the financial year 2007-08, when these cabs were first introduced.
Many drivers who pulled out said it was due to an inefficient financial model, and fewer incentives for drivers, in addition to rising traffic and long working hours. Former Uber driver Balraj Randhawa, who returned to his earlier job at a photo studio, said, “My car loan was almost around Rs 5.5 lakh. After incentives reduced, I could not financially sustain my family’s needs.”
In March 2017, the government proposed the Maharashtra City Taxi Scheme to regulate and monitor the working of these cabs. It calls for a curb on minimum and maximum fare pricing, for all these cars to be painted a daffodil yellow as well as mandatory use of eco-friendly fuel. One major component, studied for over two months by a committee led by senior bureaucrat B S Khatua, proposes a cap on surge pricing.
“Tourist cabs are here to stay. This is proven by the fact that the demand remains high even when they charge three times the base fare during peak hours. We may see a further increase in their popularity. What must be regulated is the surge pricing model,” said A V Shenoy, a transportation studies expert.
Simultaneously, though the government relaxed norms for registrations of new black-and-yellow cabs and auto-rickshaws in June 2017, no significant increase was seen in their numbers. “Market forces alone will decide the survival of the black-and-yellow cabs. Until now, we have seen no substantial increase in new permits,” said Manoj Sounik, transport secretary to the Maharashtra government.
As for the Maharashtra City Taxi Scheme, it is in force though the matter is now in court after being challenged in the High Court by taxi aggregators. Not a single company has applied to avail a license under this scheme. “Such aggregator companies are already brought under regulation elsewhere, for example in Europe,” Sounik adds. Uber’s service was banned in London in September 2017 over complaints regarding the reporting of criminal offences and carrying out background checks on drivers.
Uber said that they were not experiencing any dip in driver interest. “We currently have 2,85,000 active driver partners (who take at least one ride a week) and are seeing more and more new sign-ups every day. We are not seeing any significant churn. The future of our business depends on making driving with Uber the most attractive choice. Given the strong demand from riders, we are seeing sustainable earning opportunities for driver partners and are committed to supporting them,” an official statement from Uber said. Ola refused to comment on the issue.
The coming year could see alternative cab hailing schemes, such as mobile applications to book “kaali-peelis”. Ram Shastry, founder of DriveU.com, which allows users to hire drivers, said that this model allows drivers to simply drive cars owned by their customers, instead of taking vehicle loans. “Over the past few months, we have seen a great number of increase in drivers switching to our platform,” he said.
“If the Maharashtra City Taxi Scheme comes into force by next year, each and every tourist cab will come under one umbrella of the scheme. The business of “kaali peelis”, auto-rickshaws, Ola, Uber and other similar services will continue, but which model sustains will be decided by the way they provide service. Affordable and smart would continue to remain the keywords,” a senior transport official said.