By Aditya Gupta
The once fabled days of taxi drivers comprising the new middle class of the Indian economy seem to have come to an end, as the market has witnessed the plunge of these drivers having to resort to strikes and in a few cases, even ending their lives to be free from the burdens on their shoulders.
Uber and Ola are the first two names that come to mind when speaking about taxi aggregators. Both these companies have successfully established themselves in the Indian market with Ola having a presence in 106 cities, and Uber not far behind. They are known as taxi or transport companies, when in reality they are both merely technology companies who facilitate contact between drivers and prospective passengers. This minute detail goes a long in their functioning. It is this very detail which allows such companies to work around legal transport regulations as they are not transport companies at all. Hence going back to the example of Uber and Ola, they function freely in the country working around legal regulations, which if enforced, can incredibly bombard their business. The companies might be able to overlook legal regulations, but they cannot work around sentimental issues which in a country like India are very prevalent.
Woes and strikes
Emotional issues have managed to bring these companies to their knees which have been a victim of forced alterations more than once. The most recent one being the cab strike in Chennai, where a total of 60,000 cabs have gone on strike, with 40,000 working with aggregators like Uber and Ola. The drivers are primarily demanding better working conditions in order to secure a fixed income along with reduced performance-based incentives. C Boopathy, a functionary of the Centre for Indian Trade Unions (CITU) stated, “Among our demands are better working conditions for cab drivers. We want restrictions on the number of hours the drivers work. On some days, it goes up to 16 hours”. An added demand is to relax the 8-hour work rule. Previously, 8 rides used to guarantee a sum of at least Rs. 2000 to the drivers, but under current prices, this number has soared to as high as 12 rides per day.
V Athimulam, a treasurer of the Unorganized Car Driver Association has explained that in the Chennai, a driver needs to drive at least 250-300 kilometres per day to ensure a sum of Rs. 2000, out of which they have to pay for fuel along with the 27% commission (in the case of Ola, similar for Uber), which leaves the drivers with a sum of only Rs. 450 – 500, after a long day of at least 12 to 14 hours. This amount is frankly not enough for the survival of drivers and their families, none the less, not enough compensation for the effort put in.
Better facilities and perquisites
There have been similar instances of strikes in cities like Bengaluru, Guwahati as well as the NCR region, with added support from the Telangana Driver Association. What all of these strikes had in common is the betterment of the work environment for the drivers, and ensuring sufficient compensation along with the reduction of performance-based incentives. Added incentives like a flexible leave option and insurance would be like a cherry on top of the cake. Drivers have demanded a monumental increase in the fair from a meagre Rs. 6/km to Rs.21/km, thus ensuring their earnings of roughly forty-five to fifty thousand per month in order to assure a decent standard of living. Current driver earnings are down to an all-time low of only twenty-five to thirty thousand per month.
Looking at the situation from the drivers’ perspective gives a clearer view of the whole reason behind such outbreaks. With an incredible decrease in prices in order to attract customers, drivers are left in the dust, as their earnings too come down. They are forced to work 14 hour days in gruelling conditions which have a toll on their mental as well as physical condition. Along with the increased financial burden drivers undergo too much stress which even resorts to a situation of suicide, 3 of which have occurred in Chennai, primarily due to the financial burden.
Applicability of different business models in India
Another issue is the lack of information amongst consumers, which do not give importance to ratings. If a customer blindly gives a 1-star rating to a driver, the incentives for the current day are lost, and if this situation occurs 5 times, the driver is given an off day thus losing out on earning capacity for the particular day. Hence, customers must religiously give reviews to drivers with an honest and open mind, in order to ensure the happiness of both parties.
Taxi aggregators have global models which have they tried to implement in India, what they need to understand is that India is a very diverse market and will not be able to adjust to such norms. The best example being surge pricing (now banned in most states), this is not all suitable during rush hour with the incredible amount of traffic on the streets. They need to develop models which suit the Indian environment. With the recent investments by Softbank and Tencent group of nearly $1 Billion in both Uber and Ola, these companies now have funds to develop and implement new models.
The effective business model
It is very evident that these companies have drastically reduced the number of promotions and offers over the last few months. The primary reason behind this is profitability. In the initial stages, such offers were necessary due to fierce competition, but after the establishment of their brand images, these companies have realised the need for profits. Uber does not want to repeat the China business model in which it was losing out on nearly $200 million per month. Hence with the implementation of newer models, promotions will be reduced even further, along with prices coming back to their regular levels. Therefore with time, these companies can get back to addressing the needs of their drivers. The newest model being the purchase of vehicles by companies and renting out to drivers, therefore reducing EMI burdens and ensuring job security and stability of personnel is a step towards improvement.
The drivers as well as companies are very clear with their demands and are willing to work towards an environment satisfying both their needs. Therefore there soon might be a day when an end is put to strikes and protests, and replaced by harmony, working towards a conducive and supportive environment where issues are heard and treated to. The aggregator business has a huge potential, which established brand names will definitely not wish to lose out on.
Featured Image Source: Visual Hunt