Is Arvind Kejriwal Correct About Uber's Surge Being 'Daylight Robbery'?

Is Arvind Kejriwal Correct About Uber's Surge Being 'Daylight Robbery'?
Image credit: Creative Commons

India’s 12 billion taxi market has cut throat competition. Uber’s top rival here, Ola cabs has been dragged to the courts by Uber because it disrupt its business and poach its drivers, which is ironical because that’s exactly what Uber did in the first place to the existing Taxi services. From settling massive lawsuits in America over denying worker benefits to its driver to allegations of weak background checks of its drivers and an alleged sexual assault in India, Uber has been on the myriad of controversy since its launch.  

In the bit of controversy, Uber in New Delhi, India, had been ordered to get rid of its surge pricing. Chief Minister Arwind Kejriwal has repeatedly expressed his dissent against the concept of surge pricing, stating that it is “day light robbery” and “deceit to customers” and “will not be allowed”. The government has also been impounding cabs and fining drivers for issuing surge. But what is surge exactly and if not surge, what’s the solution?

What is Surge?

I like to call it as “evil scumbag manipulation”, but Uber itself describes it as necessary. According to Uber, surge is required to keep the strong fleet of drivers on road that it usually does. In peak hours, according to Uber, since there are a scarcity of cars, Uber jacks up prices to whatever they feel like and to encourage more rides while weeding out non-serious riders.

How does surge work?

Basically, if you’re having a bad day and just want to reach your destination, surge exists to remind you that misery is constant and there is no escape. You’re stranded somewhere and want to exit quickly and remember that its 2016 so you should be able to have a cab instantly if required and so order an Uber at the standard rate? Well too bad, the prices are jacked up to 3x the fare. Or maybe 4x. Hey, it can even be 5x if you’re unlucky, who knows? We don’t really know the algorithm behind surge pricing’s functioning, but its kind enough to warn us of its existence before you order a cab.

Here’s why surge should die:

Uber’s USP is reliability

Uber pitched the luxury and advantage of choosing a private cab because it could be reliable. Remember how surprised you were on your first ride when the Uber arrived in less than 5 minutes after you booked it? You should have the similar luxury every time, without worrying about the non-predictable nature of its pricing.

You should pay the same fare for the same distance

Imagine you reach point B from point A in x amount of money. Shouldn’t you reach back to point A at the exact same rate if you’re ordering the similar cab which drives on the exact same route? Except you probably can’t – because Uber might just flip you out and surge its prices. This is logic defying.

You’re not to blame for the peak hours

Is your competition having all its rides utilized and thus you being forced to pay more is like going to a restaurant and realizing they’re busy with lots of orders already and thus you would have to pay more to eat. This should be jackpot for both Uber as well as drivers because their services are being utilized to such a good extent. In fact, peak hours should be discounted because they’re being used with such vigor!

You shouldn’t be paying extra to drivers, Uber should be

Uber should cut down its own margin instead of making the customer pay drivers more for peak traffic. Why would you suffer, or even the driver if there’s traffic outside? No other cab services do this.

It's manipulation and deceitful

When Uber is advertising broadly that cab rates start at Rs.5/km, then cab rides should start at Rs 5 a km and not a random 3x or 4x surges. Knowing how much Uber is forever going to charge can be easy in deciding whether to rely on it later or have a backup mode of transport in hand.

Compete or perish, don’t cheat

I understand how surge prices encourage Uber to keep its fleet of drivers running during peak hours. However that gives no right for Uber to use their own shortcomings to punish customers. Uber is supposed to stay competitive and should find other ways to deal with this problem.

Ironically, there currently exists no particular law per se that makes surge pricing illegal as the Chief Minister reports, except possible sections of false advertising and cheating. If this matter drags into court and is settled, we may finally receive the legal status on surge, but for the time being it remains legal according to the constitution, even if the Delhi government says it’s not.

What’s your take on surge prices for Uber, do you think it’s necessary or just a scam? Let us know in the comments on our official Facebook page Entrepreneur India

Edition: October 2016

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