Speaking out against what it feels is the increasing practice of predatory pricing in the cab ecosystem, Ola has made strong recommendations to the Maharashtra government for City Taxi Rules 2016. The company also spoke against clauses in the law that have the potential to make life harder for its drivers, as well as make its service costlier for users.
The first point of contention that was raised by Ola had to do with the way some cab aggregators have been resorting to heavy price cuts in order to drive traffic towards themselves. Speaking about the use of aggressive price cuts by Uber to drive business away from his company, Ola founder Bhavish Aggarwal said,
Dumping money into a country because you have profitable markets elsewhere is against [World Trade Organisation] principles.
Meanwhile, Uber has an altogether different concern. While Ola is worried about the floor and price cuts, Uber is more concerned with the ceiling. The company has requested the government to consider facilitating an open price regime where regulatory bodies do no concern themselves with price rises — I assume that Uber is concerned about the future of its surge pricing schemes, which have not been faring particularly well in the country.
A price floor will prevent us from offering affordable services and a cap on pricing will make the service unreliable due to higher wait times.
Meanwhile, this is not the first time that the government has been given suggestions or asked by an entity directly involved in the field, to come in with its regulations. Previously, the Association of Radio Taxis (AoRT) that represents transportation radio taxis has spoken out against the various ways online cab aggregators manage to sneak out of some of the issues faced by offline cabbies.
Demands include a uniform law in the city, price regulation for fares, a ban upon predatory pricing and so on.
Meanwhile, it will be interesting to see how the government reacts over the issue. Predatory pricing has been a sore issue between domestic and foreign players for long. Uber, with its presence in various countries across the globe, has significantly more cash to leverage than Ola — and it has been using it to cut down prices, pulling customers away from its Indian competitor.
Maharashtra government’s decision will be important because it might just set a landmark that will be cited by the cab companies in the rest of the states as well.