Cab Aggregators: Rising fuel costs, less sops forcing most cabbies out

Mumbai | Bengaluru: Frequent users of cabs are facing trip cancellations, higher fares and longer wait times. They are also dealing with drivers refusing to go to certain locations or demanding extra fare for switching on the air conditioning.

Commuters are, in short, getting a raw deal, as a steep increase in the price of CNG and slashing of incentives by cab aggregators such as Ola and Uber have made it unviable for drivers to ply, experts said.

“It takes at least 15-20 minutes to get a ‘kaali peeli’ (black and yellow) local taxi these days,” said Meena Shah, a resident of Mumbai who uses these taxis for short-distance commutes. “Now I find myself walking half the distance before I get a cab.”

The Covid-19 pandemic has had a multiplier effect on the commercial passenger vehicle and mobility sector. A round of lockdowns and weak revival in demand threw many drivers and vehicle owners out of business, resulting in an acute shortage. Regular customers soon started opting for personal vehicles or alternative modes of transportation.

“We prefer doing short routes as longer ones often means getting no customers for the entire stretch back. The higher CNG prices also makes it operationally unviable,” said Usman Sheikh, a Mumbai-based driver.

Supply crunch

There is, of course, a huge demand uptick in the business commute and weekend travel segments, but a severe supply crunch has hit the taxi/commercial passenger vehicle segment hard, said Neeraj Gupta, founder of Meru Cabs, which was acquired by M&M last year.

Drivers in Bengaluru have fallen to 45,000 from 100,000 in the pre-pandemic period, said Tanveer Pasha, president, Ola Uber Owners and Drivers’ Association.

Pasha estimates this from posts on social media groups of drivers operating in various areas of the city. “Many have gone back to their villages and are engaging in agriculture and other activities,” said Pasha. “Driving for Ola and Uber is not lucrative anymore.”

Fall in registrations

According to data sourced from the government’s Vahan database, there has been a sharp drop in new registrations of commercial taxis over the last two years.

Overall registrations dropped 28% to 65,221 units in 2021.

Among the four metros, Delhi saw a fall of 43% to 1,263 units, Mumbai was down 4% at 2,327 units, Kolkata recorded a decline of 68% to 224 units and Chennai saw a fall of 39% to 447 units.

There has been a further drop in registrations in the year so far.

The number of drivers who logged on to aggregator platforms pre- and post-Covid in the four-wheeler segment shows that it had barely increased by 0.07%. However, this number has doubled among drivers logging on to the auto rickshaw platforms, according to data by Vumonic Datalabs.

This has been the same for the number of rides.

Though there was a dip during the second Covid-19 wave, the ride-hailing business crossed the February 2020-mark again in September 2021.

Auto-rickshaw rides spiked between September 2021 and April 2022 and rides in the four-wheeler taxi segment grew marginally during the same period.

While drivers of Mumbai’s famous ‘black and yellow’ cabs are clamouring for a price revision, “we feel fewer passengers will use taxis at the increased fare”, said Shashank Rao, president of the Taxi and Autorickshaw Union.

CNG prices have gone up by 25% in the last two months, he said.

Therefore, “we have asked

to subsidise the CNG rate for auto and taxi drivers as they are public utility vehicles,” Rao said.

The problem is not confined to Ola and Uber drivers alone.

Less than 30,000 cab drivers are currently plying compared to 80,000 a few years ago, chiefly because of unsustainable rates.

Many taxi drivers are not renewing contracts and choosing other professions, said Nikunj Sanghi, a leading automobile dealer.

“It’s a complex landscape. Supply needs to be increased with higher incentives, which will lure more drivers,” said Madhav Pai, program executive director of WRI India Ross Center.

Job perks needed

Uber’s experience hasn’t been as “magical” as it would have liked lately for drivers and riders alike, a senior executive said.

“Drivers have shared concerns about earnings in the wake of higher fuel prices, long-distance pick-ups, and payment schedules. Riders have complained about drivers cancelling trips or not wanting to switch on the ACs,” said Nitish Bhushan, head of central operations, Uber India & South Asia, in a blog post on Thursday.

Ride-hailing app Uber has hiked fares by 10-15% across multiple cities to enhance driver earnings amid soaring fuel rates, among a series of measures like flexibility on payment and destination visibility to make it easier for partners to continue operating on the technology platform.

Uber drivers will be paid more if they travel farther to pick up a passenger and will get to choose the mode of payment – cash or online – for a ride.

Ola has also introduced some of these changes. The company did not reply to ET queries.