Beating other competitors, Ola and Uber have been leading the ride-hailing initiative in India. But, they have been having some issues with its driver partners of late, with no solution for the problem in right. Thus, the drivers are now planning to come up with their own app, they now have another option — HDK Cabs. And this could be a tough pill to swallow for the cab aggregators.
HDK Cabs, which is to launch within a month, has been backed by former Karnataka chief minister and Janata Dal (Secular) politician H.D. Kumaraswamy. He has agreed to commit around ₹50 crore in the development of the service over the next two years.
Thousands of cars affiliated to Ola and Uber were unavailable for more than 10 days in Delhi and Bengaluru, beginning 12 February. The major grouse of the protesters was a drastic cut in incentives, which adversely impacted their monthly earnings and the constantly changing incentive structure of these companies. Ola pays incentives based on the number of rides per day, whereas Uber’s incentives depend on the total value of rides in a day.
Commenting on the investment in this venture, Kumaraswamy said:
I decided to assist them by introducing a new app system to protect them and get proper profit to those drivers. The lure of high income had prompted a multitude of youth to take loans, buy a car and flock to the cities to drive for Ola and Uber.
He has also said that while he will invest to build the technology, drivers, who will essentially run the company, could decide on fare and incentive structures.
For many, driving for Ola and Uber had become a lucrative option, especially because of the incentives paid by the companies to the drivers over and above the fare charged from the consumers.
It will be interesting to see how Kumaraswamy’s HDK Cabs manages to make its way in a market largely dominated by Uber and Ola. As per industry executives, both the companies incur a cash burn of at least $25 million a month, especially towards driver incentives, offers, and discounts to consumers. This spending power from the companies makes them too big a competition for HDK Cabs.
Unlike Ola and Uber, which charge drivers a commission of 25-30%, HDK Cabs plans to deduct a mere 2-5%. But, they won’t pay the drivers any incentives over and above the fare. However, drivers will also get benefits such as insurance and maintenance along with their participation on the platform.
