Demand for taxis go down, forcing Uber and Ola to launch innovative services to remain relevant

Uber and Ola, the two leading cab service providers in the country, have been in a constant battle because of their intense competition in the once fast-growing industry, and now, they have decided to further heat up the competition by launching specific services that target the value-conscious customers.

Uber will be further investing in low-cost riding options like carpooling, bike taxis and auto rickshaw services so that he can appeal to a larger section of the society. "We want to make transportation available for everyone and cabs may not always be the most affordable option for all segments," said Amit Jain, VP, Uber India, about its decision to launch bikes and ricks for its customers.

In reply of this, Ola has come up with cheapest taxi-hailing service, called Ola Micro, which provides smaller hatchbacks at minimum prices. "(It) will be the most pocket friendly mode of intra-city cab travel," said Pranay Jivrajka, Chief Operating Officer at Ola.

One area where these companies are constantly facing regulatory pressure is surge pricing, their commonly used tool where cost of a cab ride increases during peak hours. It was only last week that the Karnataka state government declared that surge pricing for app-based ride-hailing services would not be allowed.

This has happened because surge pricing makes the fare and other charges higher than the fare fixed by the government, which is against the rules.

The competition has intensified also because of the demand for taxis going down, forcing the taxi app companies to increase the customer base for other products. "In order to tap customers who use public transport, there is a need to give economical and faster option for shorter distances," Jaspal Singh, founder of transportation consulting firm Valoriser Consultants, told ET.