1 Aug 2016

How Uber Should React to the Ban on Surge Pricing

The Karnataka government banned surge pricing, limiting taxi rates to ₹19.50 a kilometer. Uber's reliability broke down as a result. At peak times, I often find Ubers to be unavailable. And if I may not be able to get an Uber back home, I go by my own car to begin with. I can no longer count on Uber. The Uber dream is unraveling.

How should Uber react to this? How can it make the service reliable again? [1]

First, release data showing how many additional cabs come onto the roads when surge is in effect. Simply claiming it is so goes only so far, since people will (naturally) suspect Uber's claims to be self-serving. Let the data speak for itself.

Second, when the price reaches the government-imposed cap and can go no further, convert all cars to pool, so that more passengers can get transport.

Third, whatever incentives Uber provides can be limited to times when the rate is ₹19.50. That will encourage more drivers onto the road at peak times. At other times, if there are insufficient drivers on the roads, increase the price.

Fourth, when the rate is ₹19.50, Uber can pass the entire amount to drivers, without keeping any for itself. It can take a higher share for itself at other times.

Fifth, during peak times, Uber can pay drivers higher than ₹19.50 out of its pocket. Charge customers more at other times to recoup.

These are all ways for Uber to make its service reliable and dependable once again, without requiring surge pricing. Uber, as a customer-focused company, should do them, in addition to complaining (rightfully) about dumb government interference.


[1] The stupidity of the government's decision is a different matter. Why regulate the price of cabs if there's no need to regulate the price of a cup of tea? Or, if the government must regulate what you pay to rent a car, why not regulate the price of a car? Maybe impose a ₹10 lac cap on car prices? The government's position makes no sense.

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