Wednesday, March 1, 2017

The Uber and Ola problem

 

In case you didn’t know, the Ola drivers are going on strike. Again. All over the country. And I guess rest of the world too, for Uber. What the strikers do not know, however, is that these companies are doomed. Their business models (if they still have one) is unsustainable , specially at such large numbers, and with costs going up everyday, they will have to price their services realistically. At which point, its game over.

Their strike might explain why I found the roads a little less jammed these past two weeks. It was relatively easier to drive around the city, even in areas usually congested. Never realized that these private cabs were causing a buildup of everyday traffic. So in a way, its good. More people should start using public transport like buses and trains.

Now I am not a fan of these new shared economy aggregators. Till date, I might have used Ola about 7 times. And that was always when we were travelling in a group, of more than 2 people. Even at the surge priced charges, I found it value for money, because the cost of the air conditioned BMTC buses in Bangalore is through the roof. And the actual driving in the city is a nightmare, better leave to someone else.  They do solve a problem, the ease at which you can get a cab booked from your vicinity. The ability to pay cashless. But they can’t actually make money. People are going to use these services only if they are affordable. Before Ola and Uber, when was the last time you hailed a sedan cab in India ? The three wheeled auto-rickshaw is the go to transportation of choice. Hiring a full taxi was only when you travelled for your company, in which case you can get it reimbursed anyway. Nobody hailed a taxi for day to day journeys.

Now the cab drivers now striking are demanding better incentives, and insurance and things like that. All of which will cost the company more. These are the very same drivers who once scammed their company out of crores. And there were those incidents of sexual assault on women too. Now that the tables are turned, they have resorted to protest.

But fact is that a more traditional model of aggrgating and pricing still works today. I was delighted to read that Meru cabs of radio taxis still operate without any problems. Meru is one of the first radio taxis in the city, and along with Fastrack, the only options till a few years back. But in their case, they own their vehicles, taking the burden of maintaining the vechicles off their drivers. That model still works. I guess Uber and Ola will have to explore something like this.

The only good thing which they introduced was their cab sharing system, where you share a cab with other riders travelling in the same direction. That has to be incentiviced. The government has to encourage ride sharing, and promote better public transport system. And a better city planning. Ultimately, the city has to be built for people, not cars.

 

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