Taxi aggregators: rising fuel costs, less sop forcing most taxi drivers to leave

Mumbai | Bengaluru: Frequent taxi users face trip cancellations, higher fares and longer wait times. They also face drivers refusing to go to certain places or demanding extra fees to turn on the air conditioning.

In short, commuters are getting raw supply as a sharp rise in the price of CNG and the reduction of incentives by taxi aggregators such as Ola and Uber have made driving unviable for drivers, experts said.

“It takes at least 15-20 minutes to get a local ‘kaali peeli’ (black and yellow) taxi these days,” said Meena Shah, a Mumbai resident who uses these taxis for short-distance journeys. “Now I find myself walking half the distance before taking a cab.”

The Covid-19 pandemic has had a multiplier effect on the commercial passenger vehicle and mobility sector. A series of shutdowns and a weak recovery in demand have pushed many drivers and vehicle owners into bankruptcy, leading to an acute shortage. Regular customers quickly switched to personal vehicles or alternative modes of transport.

“We prefer to do short journeys, as longer journeys often mean that there are no customers for the entire return journey. The higher prices of CNG also make it operationally unviable,” said Usman Sheikh, a Mumbai-based driver.


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Supply squeeze

There is, of course, a huge increase in demand in the business travel and weekend travel segments, but a severe supply shortage has hit the taxi and commercial passenger vehicle segment hard, said Neeraj Gupta, founder of Meru Cabs, which was last acquired by M&M.; year.

Drivers in Bengaluru have fallen to 45,000 from 100,000 in the pre-pandemic period, said Tanveer Pasha, president of the Ola Uber Owners and Drivers’ Association.

Pasha believes this from posts on social media groups of drivers operating in various parts of the city. “Many have returned to their villages and engaged in agriculture and other activities,” Pasha said. “Driving for Ola and Uber is no longer lucrative.”

Drop in registrations

According to data from the government’s Vahan database, there has been a sharp drop in new commercial taxi registrations over the past two years.

Overall registrations fell 28% to 65,221 units in 2021.

Among the four metros, Delhi saw a drop of 43% to 1,263 units, Mumbai fell 4% to 2,327 units, Kolkata saw a drop of 68% to 224 units and Chennai saw a drop of 39% to 447 units.

There has been a further decline in enrollment in the year so far.

The number of drivers who logged into the pre- and post-Covid aggregation platforms on the four-wheeler segment shows that it barely increased by 0.07%. However, that number doubled among drivers connecting to auto rickshaw platforms, according to data from Vumonic Datalabs.

The same was true for the number of trips.

Although there was a drop during the second wave of Covid-19, ridesharing activity again broke through the February 2020 mark in September 2021.

Auto rickshaw trips increased between September 2021 and April 2022 and trips in the four-wheel taxi segment increased slightly over the same period.

While drivers of Mumbai’s famous ‘black and yellow’ taxis are calling for a price review, “we believe fewer passengers will use the higher fare taxis,” said Shashank Rao, chairman of the Taxi and Autorickshaw Union.

CNG prices have risen 25% over the past two months, he said.

Therefore, “we asked

subsidize the CNG tariff for automobile and taxi drivers, as these are public utility vehicles,” Rao said.

The problem is not limited to Ola and Uber drivers alone.

Fewer than 30,000 taxi drivers currently operate compared to 80,000 a few years ago, mainly due to unsustainable fares.

Many taxi drivers do not renew their contracts and choose other professions, said Nikunj Sanghi, a major car dealer.

“It’s a complex landscape. The supply needs to be increased with higher incentives which will attract more drivers,” said Madhav Pai, Program Executive Director of the WRI India Ross Center.

Necessary job benefits

Uber’s experience hasn’t been as “magical” as it would have liked lately for drivers and passengers, a senior executive said.

“Drivers have shared concerns about revenue following rising fuel prices, long distance pickups and payment schedules. Passengers have complained about drivers canceling rides or not wanting to turn on air conditioners,” Nitish Bhushan, head of central operations, Uber India & South Asia, said in a blog post on Thursday.

Ride-sharing app Uber has raised fares by 10-15% in several cities to improve driver earnings amid rising fuel prices, among a range of measures such as payment flexibility and visibility of destination to make it easier for partners to continue operating on the technology platform.

Uber drivers will be paid more the further they travel to pick up a passenger and can choose how they pay – cash or online – for a ride.

Ola also introduced some of these changes. The company did not respond to ET queries.