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 Any material borrowed from published and unpublished sources has been appropriately referenced.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.
Tamas Oberoi, MBA 2015-17, Vinod Gupta School of Management, IIT Kharagpur
On demand auto aggregator app Jugnoo discontinued surge pricing in Delhi following orders from the government to stop its practice in the wake of the second phase of the odd-even scheme. This comes close on the heels of announcements made by rivals Ola and Uber suspending surge pricing in the city
Surge pricing is a standard practice across different industries and it is no different with app-based transport aggregators. However, they came to this decision following the general commotion ensued by the transport aggregator ecosystem.
Surcharging is based on the fundamental demand and supply concept of economics, where it is up to consumers whether or not they want to pay more for a service if its demand is higher. This also helps in prioritizing travel, which means that only people who really need the service will use it by paying a higher price and the rest will find other ways of commuting .
Surcharge is part of any business model and permanently banning it will negatively impact these companies. A better way to handle the situation would be to put a cap on the surge amount rather than banning them completely.