Terming the auto-hailing service as “illegal” the state’s transport authority had issued notices to the three companies on Thursday, as state laws permit technology platforms to aggregate only four-wheeled cars, a top official said. Further, the government had also demanded an explanation on reports of customers being charged fares above the state stipulated minimum rates.
“It is not legal to aggregate autos, only cars can be aggregated hence we sent them the notice,”L Hemanth Kumar, additional commissioner, Transport department, told ET.
A representative for auto-hailing app Rapido told ET that the company is “in no way intending to fight against the law.”
“We will be responding to the government in the next three days and work in accordance with what the transport authorities say to us,” the person stated.
Karnataka’s transport department stipulates Rs 30 as the minimum fare chargeable by autos in the state capital. However, base fares charged by an auto-hailing app can total up to Rs 100. This includes convenience charges that could go up to Rs 45
, and GST of 5% “which is taking the final charge to the customer close to Rs 100 as a base fare for rides up to four kilometers,” company executives said.
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A Rapido spokesperson maintained that “all our fares are determined in accordance with the fares decided upon by the state government, and Rapido is not charging any extra money over those fares,” the person said.
Uber and Ola declined to comment on the queries sent by ET.
Rising convenience fees
Earlier, in its edition of October 6, The Times of India had reported that auto aggregators are charging about Rs 100 for every ride while the minimum fare in Bengaluru is just Rs 30.
Previously, ride hailing companies would charge a convenience fee between Rs 10-15, which has been rising in recent years, executives said, as these companies focus on improving profitability and unit economics. While Uber is a public company and there is a global mandate to achieve profitability, Ola has been struggling to raise fresh capital amid a widespread slowdown in late stage funding.
“Even when you buy a movie ticket platforms charge you a convenience fee because you can buy tickets from the convenience of your home, the same way autos come to your doorstep, that has been the legal thinking behind it,” said one ride-hailing executive.
Tanveer Pasha, president of the Ola Uber Driver’s and Owner’s Association. Karnataka State Auto & Taxi Federation welcomed the move by the Karnataka government as only cars are allowed to be aggregated.
“Auto rickshaws have their own meter own fares and these fares come under ARDO and directions through the district magistrate of Bangalore city,” he said.
Run-ins with governments
This is not the first time that ride-hailing companies have been at odds with the state governments.
In 2020, The Ministry of Road Transport and Highways issued a draft policy, which is being used as a template for each state to prepare their own state level policy.
Delhi became the first state to prepare a draft policy based on Centre’s guidelines. The state government has tweaked the policy to suit the needs of Delhi and has added rules regarding electrification. Successful implementation of the policy could set a precedent for other states to chart out similar policies.
Ashish Kundra,
principal secretary, Department of Transportation, GNCT Delhi, told ET that Delhi will not look to curb any services of aggregators at the moment as the aggregator policy is likely to bring the required regulation.
Rapido had faced troubles with its bike-taxi service with the Karnataka government in 2019 as bikes were not recognised as a vehicle to ferry passengers. Later, the government came up with a bike taxi policy that would allow only electric bikes to be used.
In Maharashtra, ride-hailing companies have been asked by the Bombay High Court to strictly follow the criteria put down in the Motor Vehicles Aggregators Guidelines, 2020.
The auto-hailing service has also become prominent for ride-hailing apps amid the pandemic for its open form factor at a time when public transportation was regarded as prone to spread of Covid-19 and cars had to switch off air-conditioning. .
Ola founder Bhavish Aggarwal –whose company counts Bengaluru as its largest market for auto hailing– has earlier termed the company’s ride-hailing business a “highly profitable” business.
