According to executives, these figures explain why they are still in the red and looking at expanding the volume of business to pare down costs. The message to the government is loud and clear: if you go ahead with your new rules capping the commission, we will have to shut shop.
The government is considering a proposal to cap the commission paid by drivers at 10 per cent and to stipulate that only 10 per cent of all rides can have a surge price which, moreover, cannot be more than twice the normal tariff. The rules will only be finalised after discussions with stakeholders.
Aggregators argue that the basis of calculating a cap on the surge price of 2x by the government is not clear. They say the surge price, on average, is between 30 and 40 per cent and that too only for a few trips.
“A price has three components — a base price, the price based on the time taken between the two distances, and the per kilometre fare. Our surge price is based on an increase from the blended fare for six months in a normal demand cycle with when demand goes up,” said a source.
So what are the benefits and incentives that the companies
are ploughing back money for?
Executives say it is essential to differentiate between “good and bad drivers” and wean away those who are a problem. “For instance, we provide financial incentives to drivers based on low cancellation rates, high ratings by users, timeliness of arrival. This is essential to incentivise good driver partners,” said an executive with a car hailing company.
He added that, in order to encourage more consumers to opt for car pooling, his company provides discounted tariffs to consumers which help to make the service cost-effective.
The cab aggregator model, say executives, ensures that drivers make 20 per cent more than driving a taxi. They can earn Rs 45,000 gross per month and Rs 20,000-Rs 25,000 net after paying all the bills and for the loan of the cab, but this dictates that he works between 6-12 hours a day, six days a week.
The firms say the drivers enjoy free insurance and discounts on maintenance (which have to be done every seven weeks) thanks to the tie-ups they arrange. They also offer EMI support for the first few months, along with incentives based on the number of trips, in order to cushion the initial burden of buying a car.
If drivers need loans, the firms have tied up with microfinance companies
to offer them attractive rates. All these ‘extras’, they say, come out of their share of the 20 per cent commission.
In terms of technology, cab aggregators
say they have to spend a substantial amount on research and development, fine tuning and upgrading the platform, putting in security measures, operating a 24x7 help desk for drivers, and physical support centres.