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All you need to know about Ola, Uber surge pricing in 5 points

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All you need to know about Ola, Uber


surge pricing in 5 points
Sunny Sen, New Delhi
|
Updated: Apr 20, 2016 18:14 IST

Taxi aggregator service Uber has been operating in India for almost
two years without anyone bothering about surge pricing -- where
cab fares multiple with rising demand.

Taxi aggregator service Uber has been operating in India for almost
two years without anyone bothering about surge pricing -- where
cab fares multiple with rising demand.

20-04-2016 06:32 PM

All you need to know about Ola, Uber surge pricing in 5 points

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But the controversial model hit the headlines during the ongoing
second phase of the odd-even scheme in Delhi, when fares on Ola
and Uber went by up to five times the usual price due to high
demand.
The ensuing outcry led the Arvind Kejriwal-led Delhi government to
ban surge pricing, a move that upsets the business model of cab
aggregators.
What is surge pricing?
Prices or fares of taxis surge when the demand exceeds the supply.
This means, the number of people requesting for cabs is more than
the number of cabs available in the city. The surge happens on the
base fare fixed by cab aggregators.
Read: Ola, Ubers surge pricing under government radar
How does it work for cab aggregation apps?
Cab aggregators such as Ola Cabs and Uber create algorithms that
calculate the number of requests at any given point, and equate it
with the number of cabs available. The process and fares are
dynamic. The higher the demand, the higher the surge, at times as
high as four times the base fare.
When prices surge, cab drivers clock higher fares. A portion of this
goes to the cab aggregators. For example, Uber takes 20% of total
fare. The higher the surge, Uber makes more commission. Surge
also helps in prioritising travel. A person who needs to go for a
meeting or reach the airport takes the cab at the surged price, but
anyone who wants to go out for shopping waits till the surge ends.

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All you need to know about Ola, Uber surge pricing in 5 points

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How are prices calculated during a surge: who calculates it,


does the driver have a role ?
The mechanism of calculating surge prices is similar to ticket prices
in airlines cost of travelling drops or increases closer to the date
of travel and on occupancy. Its dynamic.
Uber and Ola Cabs use proprietary software and algorithm to
calculate demand and supply, and it happens by the minute. Cab
aggregators do not have control over supply, but according to some
company officials, surge helps in getting idle capacity out on the
roads.
What happens once surge prices come into effect?
Once, the surge happens drivers are who are at home also come
out its like a bait to earn more. That helps in increasing supply
and bringing down the surge. Surge helps in maintaining
equilibrium, the companies say.
Read: Uber, Ola suspend surge pricing after Delhi govt threat
Why is Arvind Kejriwal against it?
Kejriwal mentioned in his tweet that cab aggregating companies
who refuse to operate without surge are blackmailing commuters
and the government wont allow it. Surge is equal to looting
Delhizens, said Kejriwal. A ban was introduced for the period of the
odd-even scheme. However, on Wednesday, the Delhi government
said that the ban on surge will be permanent, and not restricted to
the 15 days of the road-rationing scheme.

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All you need to know about Ola, Uber surge pricing in 5 points

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Read: Surge pricing is daylight robbery, wont allow it: Kejriwal

20-04-2016 06:32 PM