Uber, Ola auto services 'banned' in Bengaluru; aggregators slash fares

Action after complaints of overcharging

App-based mobility players Ola and Uber have reduced the fare for their auto-rickshaw services after the Karnataka government declared these services “illegal”, following multiple complaints of overcharging, according to sources. Mobility players -- such as Ola, Uber, and Rapido – have been asked to discontinue their auto-rickshaw services in Bengaluru in next three days.

The state transport department has issued notices to these companies.

Several commuters registered complaints with the transport department about Ola and Uber charging a minimum of Rs 100, even if the travel distance is less than two kilometres (km). The minimum auto fare in Bengaluru is fixed at Rs 30 for the first 2 km and Rs 15 for every km thereafter. 

Rapido has claimed that its services and fares are in line with government rules.

“Last month, players like Ola and Uber increased the minimum auto fare of Rs 30 for the first 2 km in Bengaluru to over Rs 60 in a breach of government rules, and that is why the government took the action and sent them notices after receiving complaints from commuters,” said an industry source.

Following the action, according to the sources, Uber and Ola have reduced their minimum auto fare for the first 2 km back to Rs 30.

“The increase was only in the base fare, which went fully to the driver. As Ola and Uber revert to the original government-mandated fare, drivers’ earnings will go down,” said a source.

Industry sources said auto fare for any trip booked online in Bengaluru comprises various components. These include base fare and per km fare (mandated by the government), and a booking and convenience fee that is charged by the aggregator.

One of the reasons for these app-based mobility players increasing the base fare was to compensate auto-rickshaw drivers for the increased fuel prices, industry sources said. Also, unlike an auto-rickshaw hailed from the street, booking with aggregators involves a “pick-up” component. “As fuel price changed, the pick-up cost went up and it became unviable for drivers to make pick-ups in the absence of any fare increase,” said a source.

However, the Karnataka transport department has dubbed the auto services run by these cab aggregators “illegal” under the On-Demand Transportation Technology Act, 2016. According to the sources, these players were granted licences based on the Act and its rules do not apply to auto-rickshaws. These aggregators have been directed to submit a report.

“As per the provisions in the On-Demand Transportation Technology Act, 2016, aggregators are given licences to provide taxi services only -- taxi means a motor cab having a seating capacity not exceeding six passengers, excluding the driver, with public service permit on contract,” said the transport commissioner, T H M Kumar, in a notice issued on Thursday.

In the notice to these mobility players, the transport department said that some aggregators are providing auto-rickshaw services in violation of the aforementioned regulations. 

“Also, it has come to the attention of the department that customers are being charged higher rates than the rates fixed by the government,” said the notice.

The notice said the provision of auto-rickshaw services has been directed to be discontinued; it asked these ride aggregators not to charge passengers more than the rate prescribed by the government. If you have any explanation about the illegal auto-rickshaw operation, you are advised to submit it within three days. If not, legal action will be taken,” said the notice.

In light of the notice, Rapido on Friday said it would like to clarify that none of its operations in the city of Bengaluru is illegal.

“We have received a notice from the road transport authority, and we will be responding to it within the stipulated time,” said Rapido in a statement. “The allegations being made regarding extra money charged by Rapido on auto-taxi fares are completely false. All our fares are determined in accordance with the fares decided upon by the state government, and Rapido is not charging any extra money.”

Rapido said it will continue operating in Bengaluru under the ambit of the law. “Any false allegation levied on our auto-taxi services in Bengaluru are not only irrational but also inhumane, as they jeopardise the convenient daily commute of thousands of citizens, and risk the livelihoods of our captains, who rely on us for their daily income,” said Rapido. “We intend to keep serving the people of Bengaluru by providing them with a safe, convenient and economical commute.”

The Competition Commission of India (CCI) on September 9 also issued an advisory to cab aggregators (CAs) like Ola and Uber recommending that they adopt self-regulatory measures to address issues like surge pricing and lack of transparency. It asked them to formulate clear and transparent policies with respect to the sharing of revenue on account of surge pricing between the drivers and the CAs. This came after several consumer and driver complaints of unfair trade practices by these platforms.

BUMP ON THE ROAD

1. Govt issued a notice to the companies in which it stated that aggregators have been allowed to run the application taxi aggregator services under the Karnataka On-Demand Transportation Technology Aggregators Rule-2016
2. Companies have been given three days to share details on the autorickshaw services being offered by them
3. Rapido said its operations in Bengaluru are not illegal and it will respond to the notice
4. According to the rules, only taxi services can be provided and taxi means a motor cab having a seating capacity not exceeding six passengers excluding the driver with a public service permit on a contract
5. CCI on Sept 9 said that cab aggregators have to formulate clear and transparent policies with respect to the sharing of revenue on account of surge pricing between the drivers and the CAs