Exclusive: Uber says surge pricing as a core model won’t change for India

It’s been a few days since the Delhi government has forced Ola and Uber to suspend surge pricing. The companies aren’t very happy for obvious reasons. On one hand is the obvious hit to the business, on the other hand local governments playing around with their core business model leaves them struggling to supply enough cars in high-demand metros.

Delhi Chief Minister Arvind Kejriwal recently said driver permits would be canceled if they follow surge pricing. However, an Uber spokesperson claimed today that despite suspending surge, some Uber and Ola cars were impounded.

“They (Delhi Traffic Dept.) have (impounded cars) yesterday, despite us suspending surge”, Uber Spokesperson Ruchica Tomar said. However, when asked about possible legal action from the company’s end, she refused to comment.

This is in sharp contrast to what the Delhi Chief Minister recently tweeted about the real condition of Delhi’s roads.

Overcharging, diesel cars, drivers without license/badges n blackmailing by taxi aggregators won't be allwed(2/2)

— Arvind Kejriwal (@ArvindKejriwal) April 20, 2016

Kejriwal has even called surge pricing ‘daylight robbery’ and said ‘no responsible govt can allow that’. The minister went far enough to say:

Some media houses supporting surge pricing. One of these media houses has Rs 150 cr investment in one of these taxi aggregators

— Arvind Kejriwal (@ArvindKejriwal) April 20, 2016

As for Uber, there’s no second way. “Surge is the very basis of how we predict demand and supply, and how we match up to it. We’re having a hard time catering to this unusually high demand during Odd-Even. We’re trying to engage with the government to figure out a way”, the Uber spokesperson said.

Ola and Uber both confirmed there are no plans to add more cars overnight, and that they have only temporarily suspended surge. “There is no definite time period that we’ve suspended surge for. People are confusing it with Odd-Even”, the Uber spokesperson said.

While Uber and Ola both confirmed that surge pricing as a core business model won’t change for India, both are encouraging riders to choose their carpool and ride share services. That increases one’s possibility of hailing a cab, and taxi aggregators still get your cash. Something’s better than nothing, after all. However, between the clash of the Titans, two people get stuck, the rider and the driver.

The issue of surge pricing is not limited to Delhi only. Various State governments are raising red flags against surge-based models. This has opened up a wider debate on whether its anti-competitive to charge more when there’s more demand, or if its fine to not offer a cab even if someone’s willing to pay more. To put it in Kunal Shah's (Co-founder, FreeCharge) words, “If someone wants to pay twice or thrice to get a cab for an emergency, who is the victim?”

Uber and Ola have been in the line of fire of governments, first with taxi permits, then CNG, and now this.

Image credit: Indiatimes