Early yesterday morning I had a minor scare when Mega Cabs stood me up. I had a flight to catch at 7 am to Mumbai, and had booked a Mega Cab for 5am. This was after consulting a few friends who are frequent travellers on Monday mornings, who advised that finding an Uber or Ola at 5am is not particularly straightforward. I must mention that I haven’t done business trips for a while, which means I haven’t had to catch 7am flights, so the last time I took one such flight was before Ola/Uber became big in Bangalore (October 2014). And I’ve always preferred Mega to Meru since their cabs are relatively better maintained and more prompt.
And then Mega stood me up. The assigned driver Nagesh N never called me, and when I called him, didn’t pick up. I didn’t panic, since I knew I could get a cab on Uber or Ola, except that neither had any cabs available. I called Mega customer care, who promised an alternate cab at 5:15 (still leaving enough time to get to the airport and catch my flight). But then I received an SMS saying that I’ll get a cab at 6:15. Rather than arguing with Mega, I tried Uber once again, and this time I was in luck, finding a cab that would take me to the airport at a surge of 1.8X (80% more than the “normal” fare).
So on the way to the airport I got talking to Kumar, my Uber driver, about the economics of cab rides in Bangalore, and airport trips. As I had mentioned in my earlier post on Uber’s new pricing model, the reduction in per kilometer fare and increase in per rupee fare has meant that an airport run is normally not remunerative for an Uber driver. Add to this the fact that Uber’s bonus payments to drivers are on a “per trip” basis rather than a percentage or distance basis, that a driver reaching the airport at around 6am has to wait for at least a couple of hours to get a passenger to ride back to the city, and that Uber’s new bonus structures that began today not paying much incentives for trips before 7 am (this was told to me by Kumar), drivers have responded by simply not switching on their Uber systems at 5 in the morning, when the likelihood that any trip is an airport run approaches 1.
This is clearly inefficient, and consequence of bad pricing on behalf of Uber. On the one hand, drivers are denied opportunities to carry customers over long distances, which is an airport run. On the other, customers are inconvenienced thanks to the lack of cabs, and have to rely on the otherwise rather unreliable and mostly unused Meru or Mega cabs, whose cars are of poor quality and drivers unresponsive. A lose-lose situation. All thanks to bad regulation (read my post in Pragati on how Uber is like a parallel regulator).
The solution is rather simple – an airport surcharge. Any trips to or from the airport on Uber can be slapped a further surcharge (of Rs. 200, perhaps). Such a surcharge will make the ride remunerative for drivers, while at the same time still keeping Uber much cheaper than the likes of Meru or Mega. In fact, this morning’s trip, after the 1.8X surge, cost me Rs. 780, which is cheaper than what it would have cost me if Nagesh N of Mega Cabs had not ditched me, and I could pay in a “cashless” manner, directly from my Paytm account. It’s a surprise that Uber hasn’t yet figured this out, given all their “data science” prowess!
Update:
A friend who I met on the flight told me that in his town (Whitefield) it’s not hard to find an Uber/Ola cab at 5am on Mondays, except that the drivers cancel rides once they figure out it’s for an airport drop. Again pointing to the fact that incentives are not aligned for maximum throughput
Hey i take cabs at 4 am, and havent faced issues with Uber till date… And i swear by uber, no so idea on other cab services anymore
Interesting. maybe I should’ve started searching earlier. I began only at 4:45, and finally at 5:05 found an Uber for 1.8X.
Uber us a disaster. Their pricing is way way below the operating expenses. Drivers can make a quick buck only with short trips. Chennai drivers demand that you take 2 trips if distance is more than 20kms. Drivers in Pune request you for an added trip claiming it won’t cost you extra. They are also charging for cancellation after 5 or 10 minutes ..
how will it not cost you extra if you do two trips? Given that you have a 40 buck fixed charge for every trip?
Ola driver told me he is paid Rs.10 per km. If that is so, then an airport ride may be just enough to tide them over for a 1-2 hr wait there. But yes, their incentive is for doing at least 14 trips a day, so they try to maximize short trips (about Rs.750 per day if they manage 14 or more) – he was saying 14 is impossible to do in general when an airport trip comes up.
exactly. so the problem is with the structuring of the incentives which leads to grossly misaligned incentives. Or (conspiracy theory alert) maybe if it’s some kind of an arrangement with Meru/Mega so that the latter’s airport business is intact
Uber has a pathetic payment system. It is currently paying Rs. 200/- per trip to its drivers.. I’m not sure of all cities, but that’s the case in Pune. Several drivers have informed me this.
That’s the reason these guys aren’t interested in long trips. They say instead of making 1 long trip, they have a good possibility of making minimum 2 short trips.
I don’t understand who guys are deciding such policies. They’re totally out of their mind with no practical sense. They’ve left the luck of customers into the hands of drivers, infact totally on driver’s will.