Surge Pricing issue post Odd-Even scheme in Delhi

The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

Sarthak Singla, MBA 2015-17, Vinod Gupta School of Management, IIT Kharagpur

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As what happens in most cases, the prices charged for a product or a service of high demand, the pricing or money charged by cab companies like Ola, Uber etc. also vary with demand. As demand rises and supply falls, prices are increased to encourage more and more drivers to go online and meet the demand.

The same is what happened when the odd-even scheme was re-launched in Delhi with effect from April 15. After commuters took to social networking sites alleging that rates were hiked due to Monday being the first full working day of the fortnight-long scheme, the Delhi Transport Department issued a helpline number aimed at bringing overcharging drivers to book, warning of legal consequences, including cancellation of permits and impounding of vehicles.

With Delhi Chief Minister Arvind Kejriwal warning strict action against Ola and Uber vehicles allegedly overcharging riders on the first full-fledged working day of the implementation of the odd-even vehicle rationing scheme, both app-based cab companies temporarily suspended surge pricing in the Capital on Monday.

The government would penalise the accused cab driver with immediate effect, it also intended to tabulate the complaints and forward them to both companies for disciplinary action. Both firms, after deciding to suspend surge pricing in the Capital till the conclusion of the odd-even scheme on April 30, however, claimed that surge fares were not controlled by them but were decided in real-time based on demand and supply situation.

“Strict action, including permit cancellation and impounding of vehicles, to be taken against taxis which charge rates more than government prescribed rates,” Mr. Kejriwal tweeted on Monday, April 11, 2016 within hours of which both Uber and Ola announced temporary suspension of the surge pricing citing “support for the government’s odd-even initiative.

Gagan Bhatia, general manager, Uber North, said that the company did surge pricing when demand outstripped supply. “Higher prices are required in order to get cars on the road and keep them on the road during the busiest times. This maximises the number of trips and minimises the number of people stranded … without surge pricing, there would be no car available when people need it,” he said.

Deep Singh, Business Head (North), Ola, said: “To make the government’s odd-even initiative a success, Ola has temporarily pulled out peak pricing in Delhi NCR.”

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