[Kiterunner]

I met a frustrated UBER driver yesterday who is now finding it difficult to continue the business. The max he is getting monthly ranges from 45-55K. He has an EMI of 18K for his Etios which he brought thinking that he can afford it from the UBER money.

Things are definitely not working out as planned for these guys. The driver mentioned that he is looking to attach his car to corporates or hotels for additional income.

[Zinda]

Originally Posted by RaghuVis

Oops..Landing on 15th late night at Bangalore Airport. Am i not gonna get any taxi? KTDC might be operational still right?

You can book a Meru in advance. BIAL Volvos are sparse late night. Here is the schedule:
http://www.ewebbuddy.com/2016/04/ban...yu-vajra-bial/

[cpbopanna]

Originally Posted by SDP

..So its the predatory pricing by OLA and UBER that is is responsible for the current mess. Even with 11 Rs and 13Rs per km they were significantly cheaper AND better than other options in the market. There was really no need to drop to 8 and eventually 6Rs per km.

The so-called Rs. 6/km and Rs. 8/km is actually a myth.

When you consider the fixed component of Rs. 35 (or Rs. 40 for Uber X), Re. 1/km for ride time AND the ride cost of Rs. 6/km (or 8/km for Uber X), you will see that the actual (total) fare is seldom below Rs. 15/km!
There have been many instances when the total fare has exceeded the state mandated Rs. 18/km, even without a peak-time charge being levied!
I have had arguments with Uber that they have crossed the Government limits and may that I have to complain!

That apart, we need to see what part (how much) of the fare we pay Uber actually reaches the drivers - this appears to be very non-transparent (opaque)!
The bone of contention therefore is the sharing of booty between the cab aggregators and drivers, and not how much more the customers ought to be charged!

In the recent Bangalore strike, the drivers were demanding that the cab aggregators need to charge the customers the government fixed minimum fare, without realizing that in most cases, they (the aggregators) are already doing so!

The cab aggregators may be milking their investors, but neither are the 'drivers' nor the 'riders' left far behind!

The ride-share is a good arrangement no doubt, but when three customers 'share' a ride, each customer does not pay 1/3 the cost, but rather 1/2 the cost.
It is a win-win situation for the customers and cab aggregators; but the ratio of win-win is not 50:50!

[SDP]

Originally Posted by Bh.P

Have you checked the actual cost per KM after the base rate and the per min charge is added? (I am not even talking of peak pricing)

Here are some examples from my past 3-4 trips
Ola Micro 8.6 KM - Rs 132 ~15.5 per KM
Ola Micro 8.9 KM - Rs 143 ~16 per KM
Uber Pool 14.5 KM - Rs.170 ~11.75 per KM
Uber Go 13.6 KM - Rs 187 ~13.75 per KM

None of the above have surge pricing. The average comes to around Rs. 14 to Rs 15 per KM. There have been times where this has gone up to Rs 20 per KM for me. I have NEVER got a per KM rate of less than Rs 10 or 11. So, the Rs 6 per KM is not a correct number to work out with. If share, the driver gets from 2 parties (may not be the case always).

Yes, I am aware of this. My point was 14-15Rs is still way cheaper than black-and-yellow cabs, Cool-cabs, Meru etc and was not really needed beyond the first few months.

Also, currently, the drivers earnings is based on incentives, more than the trip revenue. I was talking to a Ola driver last week, and he gave me some numbers like Rs 1500 for completing 6 trips in a day, 3500 for 12 trips and 5000 for 18 trips. He said the Uber incentive scheme was better.

Unfortunately incorrect information. I know at least 2-3 guys who do this for a living. Ola (at least in Mumbai) gives incentives in the form of Minimum Business Guarantee. I don't know what are the current numbers, but it was something like ~2500Rs min business guarantee for 8 trips in a day. Please note, unlike what many people believe, this is NOT on top of what the cab makes from the 8 trips. If the fare from the 8 trips is 1500 Rs that the driver has collected, OLA would top that up to 2500Rs. From this, about 25% is deducted towards OLA commission. If you reduce driver salary (typically 25K per month), fuel expenses and EMI, there is barely anything left.

His grouse was that the incentives have gone down compared to what they were earlier. So, it is the greed and the dejection of not getting what they got earlier which is leading to this discontentment.

Even if the driver owns the car himself, the labour is his and so he does expect 20-25K just for himself and I believe that is justified. After all he can easily make 12-15 K as a salary for a regular private duty which is typically drop the sir/madam to office in the morning, sleep in the car during the day and then drop the same sir/madam to home at 7-8pm. So when he works for significantly more hours and drives 150-200kms easily in a day as a Ola/Uber driver, he definitely expects 25K just for his effort. If he has bought a car, the expectation is that the revenue covers the EMI, maintenance and some profit. With current per km rates and incentive schemes, its becoming increasingly difficult for these guys to even break even.

Originally Posted by Nav-i-gator

1. For a drive of around 3 KM in gurgaon (at 12 noon or 8 PM) costs about Rs 73 (and about Rs 55 for share) with Uber. This isn't cheap.
...

Because of the fixed charge and per minute charge besides the per km charge, OLA/UBER are economical only for fairly long distance trips like 15kms and above.

Originally Posted by pratyush6

Honestly, I find the argument that Uber/Ola are cheap slightly hard to believe. If I go to my office, it works out around 18 per km (it's more than 15kms), smaller distances are more like 11 - 14 per km (Uber Go/X).
...

The effective per km rate would be lower for long distances and higher for short distances. Please check your calculations.

[WorkingGuru]

I only see that Uber is introducing fair competition for improved cab availability.

These protesting drivers want to bring back times like when we were constantly harassed by Village Goons - turned - Auto Rickshaw drivers (for charging over the meter, destination refusals, luggage extra etc etc etc).

Uber/OLA has provided us the transportation solution we couldn't imagine. Granted they actually charge ~15 to 20 per KM, but they've replaced the most under-utilised asset of the Indian Middle Class, a car.

To the few who pity the drivers, please don't assume they didn't realise the economics behind Uber/OLA burning money to capture market. They took full advantage, fair & unfair, when the young company was in a financially risky & vulnerable stage.

P.S. : I'm not indifferent to poverty, but seeing what my relative went through recently while constructing his house, I realised why increasing number of people have very little empathy for the present generation poor.

[theredliner]

Since we're on the topic of effective per km charge, I calculated the total fare I paid to Uber in 2016 and divided it by the total km travelled. The average came to ~16.4/km with most of these trips being > 15 km.

Originally Posted by SDP

The effective per km rate would be lower for long distances and higher for short distances. Please check your calculations.

Unfortunately, it is no longer the case. Once 15 km mark is crossed, per km cost doubles in Uber (I think same was implemented recently in Ola as well). I think the most economical ones are the 10-15 km trips.

[Nav-i-gator]

Originally Posted by SDP

Unfortunately incorrect information. I know at least 2-3 guys who do this for a living. Ola (at least in Mumbai) gives incentives in the form of Minimum Business Guarantee. I don't know what are the current numbers, but it was something like ~2500Rs min business guarantee for 8 trips in a day. Please note, unlike what many people believe, this is NOT on top of what the cab makes from the 8 trips. If the fare from the 8 trips is 1500 Rs that the driver has collected, OLA would top that up to 2500Rs. From this, about 25% is deducted towards OLA commission. If you reduce driver salary (typically 25K per month), fuel expenses and EMI, there is barely anything left.


Even if the driver owns the car himself, the labour is his and so he does expect 20-25K just for himself and I believe that is justified. After all he can easily make 12-15 K as a salary for a regular private duty which is typically drop the sir/madam to office in the morning, sleep in the car during the day and then drop the same sir/madam to home at 7-8pm. So when he works for significantly more hours and drives 150-200kms easily in a day as a Ola/Uber driver, he definitely expects 25K just for his effort. If he has bought a car, the expectation is that the revenue covers the EMI, maintenance and some profit. With current per km rates and incentive schemes, its becoming increasingly difficult for these guys to even break even.


The effective per km rate would be lower for long distances and higher for short distances. Please check your calculations.

All said and done, as I said earlier, Uber/Ola is a symbiotic relationship with drivers (read businessmen). In order to grow, both need to keep themselves invested. Ola/Uber do give them business, much more than they could get on their own. Uber keep giving customers free rides or discounted rides every now and then. I don't think drivers get less if I get on a free ride. This is a long term investment. If it doesn't work and does not turn profitable, uber/Ola will shut shop and drivers will have to look out for themselves.

Any case, if the drivers feel that it is not profitable for them, what stops them from dissociating themselves with Ola/Uber and start on their own? Why sabotage other drivers' income who want to continue?

As for shorter drives being more costly than longer ones - isn't it better for the company as well as drivers to get more trips of shorter lengths every day than a few longer ones?

[Bh.P]

Originally Posted by SDP

Yes, I am aware of this. My point was 14-15Rs is still way cheaper than black-and-yellow cabs, Cool-cabs, Meru etc and was not really needed beyond the first few months.

Agreed. But Ola/Uber always positioned themselves as competition to auto rickshaws. So I just pointed that their claimed price of Rs 6/KM is not true, nor is their claim that it is cheaper than an auto.

Originally Posted by SDP

Unfortunately incorrect information.

The threshold trips for incentives could vary by city. What I posted above is what I got from two drivers last week in Bangalore. Infact, one of them mentioned that once he does 16 trips and has just 2 trips to do for the highest incentive slab, Ola locks his account! and he can not do further trips.

Originally Posted by SDP

unlike what many people believe, this is NOT on top of what the cab makes from the 8 trips. If the fare from the 8 trips is 1500 Rs that the driver has collected,

Correct. The incentive includes the trip cost. But, I think that is still a good income.
Let us assume a driver logs in for 12 hours a day.
I think a typical trip is <1 hr, and < 10 kms (majority are in this category according to one driver, I may be wrong).
So, he can do approx. 12 trips a day.
For this he gets Rs. 3500 from Ola. For an average of 120 kms a day. That is around Rs. 29 per KM. 26 days a month, that is 90K.
With your Bombay numbers, even if he does 8 trips a day, he gets over 60K. I don't think anyone would stop at 8 trips. So what he does over that, I think they get over the incentive. Not sure.
I know this is no where close to what we earn sitting in the confines of our office. But, India is still very far from equality between blue and white collar jobs. Ola/Uber are a small step in that direction.

Originally Posted by SDP

The effective per km rate would be lower for long distances and higher for short distances. Please check your calculations.

Not necessary. Uber charges Rs 14 per KM after 15 kms. I think Ola also has a higher per km rate after 12.

[lsjey]

Well if the drivers go on strike, the real beneficiaries will be the local autowallah. They will make merry fleecing the people for the day.

The real losers, will be the drivers. They will lose the potential earnings for the day. And of-course the customers who will be inconvenienced

[LonelyPlanet]

Hopefully the traffic will be better tomorrow since the haphazardly parked cabs will be off the IT parks.

[phamilyman]

Originally Posted by WorkingGuru

To the few who pity the drivers, please don't assume they didn't realise the economics behind Uber/OLA burning money to capture market. They took full advantage, fair & unfair, when the young company was in a financially risky & vulnerable stage.

Bingo. I have no sympathies for 70%-80% of their drivers. I talk regularly with drivers in my rides (1+/day easily) and I have found that no one's a fool. Most of them knew what they were getting into - they knew that the initial income was not likely to continue forever, things would get hard once fares rose and demand fell, and they simply want the good times to go on as long as they can.

Some (20-30%) were truly clueless and I feel for them but for others, it is no different from any one else who took a business risk at a good time, encashed it for a few months (or even a couple of years) and is now looking at lower earnings. The strike is just about fighting off the inevitable.

Courtesy the diesel-mess in Delhi, most drivers had already moved to smaller WagonR's instead of diesel cars for new purchases. So the NCR drivers would be better off than others around the country who may have bought costlier cars (esp in Gurgaon).

[drsingh]

Innovation is good. Cab aggregators with their GPS software are here to stay. There will be equilibrium between private car ownership and cab fares. Let the market work it out. There is no 'solution' to this problem. . Only trade offs.

A good side effect of these cab aggregators is that the auto wallahs and private taxi wallahs are also innovating. Using Whatsapp and business cards and building personal relationships with students, parents, single women to provide reliable and on demand service as per the need of customers. These guys will always have the edge with local knowledge and niche areas.

If there is oversupply in the market, the marginal players will be affected. That's just economics.

[Fillmore]

For those stuck today due to the Ola / Uber strike you can give UTOO a try. Have not used it yet, but installed the App just in case.
http://www.utoorides.com/

[Eddy]

Originally Posted by phamilyman

it is no different from any one else who took a business risk at a good time, encashed it for a few months (or even a couple of years) and is now looking at lower earnings. The strike is just about fighting off the inevitable.
.

Not to mention all the "innovative" ideas to fake rides for earning the incentives.

A majority of the drivers abused the incentive system which is coming back to haunt them.

[Coolman]

Big launch of cab-aggregators, rapid expansion, acquisitions, jaw-dropping pricing and then further price cuts - I thought this was all part of the game, the business game!

• Big launch of cab-aggregators - time to market is very important in this millennium, the quicker it is, the lesser the time available for existing players to react!
  
  
• rapid expansion - to stay in business and to look towards long term returns, even at the expense of initial losses
  
  
• acquisitions - to expand and to curb competition, E.g.: - OLA took over TaxiForSure!
  
  
• jaw-dropping pricing and further price-cuts - Meru, Easy etc. were charging Rs 15-20/- per km, with a minimum Rs 200 for the first 10 kms and some local area operators were happy doing 3-4 trips per day (averaging 15 kms per trip), charging Rs 300-400/- per trip! Autos were holding customers to a ransom wherever possible! This jaw-dropping pricing by these aggregators has nearly wiped out most of these situations! Further price-cuts only meant that the aggregators were getting fierce against each other and attracting more customers to provide more business to the drivers!

A quick review of the facts:

• When these 2 big aggregators weren't around a driver in Bangalore would make about Rs 8000-14000/- per month + bata as applicable!
  
  
• Uber started with a package of "trips" to be done by the driver (like 6 trips per day, 10 trips per day etc) and eventually added a package of "earnings" that a driver will make (like Rs 1200 per day, Rs 2700 per day etc. after deductions), these can be seen as an evolving business model!
  
  
• Hasn't this created employment, hasn't this created business owners? Today a good number of drivers attached to these aggregators own their business!

Understand that there are bad days, when a driver doesn't do sufficient trips or earnings! On the positive side, we look at the market base that has been created - today the no. of people using their cabs is unaccountably huge! Today an auto will fetch you for lesser prices than what they would ask of you in the past!

A promise of a lakh - the aggregators will still possibly pull out a case study and demonstrate! Well I am no one to make a claim that Rs 3000/- per month is enough income to make, but isn't it sweet when compared to the Rs 8000-14000/- per month that one would make in the past! Bad days of not making trips were there then too!

This isn't a case against the drivers, but somewhere they need to realize, that any spike that is huge will not sustain, as long as the spike takes the graph to a level better than where it was, it is generally a good sign!

To conclude however, I can say, that this act of agitation by the drivers is also a part of the game! Let us see how the aggregators react!

Thanks,
C_