Karnataka asks Uber, Ola to resolve driver issues

Transport dept questions legality of ride-sharing services

The Karnataka government has asked ride-hailing services Uber and Ola to resolve compensation and wage issues with drivers.

Earlier last week, thousands of drivers attached to Uber and Ola went off Bengaluru streets to protest reduced earnings. The companies had sought time till Monday (January 30) to respond to drivers and the state transport department on how they would work to bring the issue to a close.

“The problems are mostly between the drivers and the management. We have asked them to solve it internally. The companies have asked for time till Monday to get back and we will meet them and see how the issue can be solved,” said MK Aiyappa, commissioner of transport, Karnataka.

While the transport department is looking at a peaceful resolution of drivers’ qualms, it is also mounting pressure on Uber and Ola by questioning them why their ride-sharing services should not be deemed illegal. The state authorities have given both companies time until Monday to justify offering such services despite cabs having only a point-to-point permit.

The state’s move to target ride-sharing services UberPOOL and Ola Share was insinuated by complaints from drivers of not earning enough from fares (especially on shared rides). They said the companies had created an oversupply and were reducing incentives offered, adversely affecting their livelihoods.

“The permits they have allows them to do only point-to-point rides, so how are they offering shared rides? They have asked us for time till Monday to respond and we will also look into what legal recourse we can take,” added Aiyappa.

Bengaluru had an estimated 113,000 cabs on its roads during 2015-16, nearly a twofold increase in two years, according to Delhi-based Valoriser Consultants. The city is the largest market for both Uber and Ola in the country, but also one of the hardest to do business given the state’s rules for taxi aggregators that sets a maximum fare cap.

While the number of cabs on the streets has grown dramatically, the growth in the number of rides has slowed to 3-5 per cent every month, as opposed to 30-40 per cent in the same period last year. Experts say this is forcing cab-hailing companies to reduce incentives as they look to bring about a balance in demand and supply, while also moving towards profitability as investors mount pressure.

“More than 1 lakh drivers are coming on the roads and they’ve started putting penalties on the drivers. If the customer is cancelling a ride, and saying that the driver denied a ride or the driver was late, we have to pay Rs 500 in penalty. They have started a new channel for this and they are giving targets to team leaders, for the minimum amount to be collected through fines,” says Tanveer Pasha of Ola TaxiForSure and Uber Drivers and Owners Association. 

Shared rides are 20-40 per cent cheaper than taking a personal cab and make up for a large chunk of the rides the two companies do on a daily basis. With the state claiming that such services are illegal under the contract carriage permit that cabs hold, the issue could once again move back to the courtrooms. This could change if the Centre’s guidelines on taxi aggregators of December 2016 is implemented as it advocates use of ride- sharing to improve utilisation of cabs that could potentially reduce vehicles on roads.

At loggerheads:

* Thousands of drivers attached to Uber and Ola went off Bengaluru streets to protest reduced earnings

* The state authorities have given both companies time  until Monday to justify ride-sharing services despite cabs having only a point-to-point permit

* Bengaluru had 113,000 cabs on its roads during 2015-16, nearly a twofold increase in two years

* The growth in the number of rides has slowed to 3-5% every month