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Ride-hailing service major Uber India on Tuesday said that it may have to limit the auto services to certain parts of Bengaluru as running the business may turn unviable due to order to cap commission at 10 per cent of the fare, said in a blog post.
“If our costs can not be covered through commissions, we will have to find ways to offload costs that could impact the experience of drivers and riders. In the face of these commission caps, we may have to make the difficult decision to limit Uber Auto to select parts of Bengaluru where the service is viable,” said Nitish Bhushan, Head of Central Operations, Uber India & South Asia in the blogpost.
The statement came days after Karnataka’s state transport authority sent notices to Uber and Ola and other ride hailing aggregators stating that state laws permit technology platforms to aggregate only four-wheeled cars.
Uber India said that the move will hurt drivers and inconvenience riders who depend on aggregators for their commuting needs.
The company said that customers have the advantage of doorstep pickups, and no longer have to walk to auto-rickshaw stands or hail an auto off the street.
“Every month, over 10 lakh residents of Bengaluru use Uber Auto to get around their city. They are served by over 50,000 auto drivers who supplement their earnings via Uber. However, drivers need to be compensated for the additional distance they travel and time they spend providing these doorstep pickups,” said Nitish Bhushan.
The company said that the current fixed metered fare does not adequately compensate drivers for the additional distance traveled and time spent in picking up a passenger from their doorstep. Uber also said that there is an increase in cancellations after reducing the commissions.
“To be absolutely clear: Our commission ≠ our profit. A flexible commission structure, and one that ensures a fair margin for aggregators, will ensure the sustainability of e-hail autos and also encourage investment in the space, leading to the introduction of new features and services.
Karnataka high court on October 14 ordered the government not to take any coercive action, and allowed the companies to charge 10 percent of the base fare as a convenience fee along with 5 percent of GST as a temporary rule before the authorities come up with a plan.
The court had also given 15 days time to the state government, regulators, and cab aggregators to work out a fair pricing mechanism.
“Bengaluru deserves more travel options, not less,” it added.
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John Miller has been writing about science, gaming, and tech culture for over a decade. He’s a top-rated reviewer with extensive experience helping people find the best deals on tech and more.
