Surge Pricing Debate: Ola Uber Allez! Fare Turned Unfair!

Surge pricing is another victim of politics and outcry by the general public, writes Gautam Mukherjee.

There is something fascist about surge pricing. It says I’ve got you over a barrel and so!

Kejriwal of Delhi who is definitely not any more my favourite than Siddaramaiah of Karnataka has impounded some 30 Uber/Ola cabs for nonsense surge pricing - and he seems to have got this one right.

All the buzz about algorithms and variable pricing, private enterprise, surge in demand in micro localities, where cabs may or may not hover in sufficient numbers, is nothing but rapacious talk about taking unfair advantage. Particularly in cruelly-congested cities like Bengaluru and Delhi, with grossly inadequate public transport.

Walk away a bit, as some commentators helpfully suggest. Move away from the hot spots and ask the app again.

Soft Target

The outrage against Ola/Uber has been taken seriously by the government, out of guilt and prudence, if not remorse.

Meanwhile, the government in the city state continues to play ducks and drakes with pollution control. And this, by picking on soft targets - persecuting the freedom of private car owners who have paid road tax, worth 15 years, to presumably drive their cars as they please.

Missing the Point

Meanwhile, the Communists at the Green Tribunal, aided and abetted by the Supreme Court, have gleefully banned the registration of large, frightfully expensive SUVs, purchased, no doubt by the masses, at over a crore each.

They are also out to sting those with the temerity to buy new diesel vehicles, of any size whatsoever, with a new, 30 percent punitive tax!

For the rest, the Delhi government does not know how to stop heinously polluting out-station trucks, roaring into the city every night, killing anybody in the way.

Nor can it dare to attack the loads of two to four-stroke engined motorcycles that buzz like flies in our streets. Or the cancer-generating CNG vehicles; and certainly not the fat cat - VIP cars.

The pollution statistics are proving stubborn. They are little impressed with this much-advertised scheme, colluding sometimes with summer breezes, sometimes not.

Who’s At Fault?

• Controversial surge pricing model comes under the scanner during the second phase of odd-even as taxi fares went up by five times.
  
• Outcry following high fares on Ola and Uber saw Kejriwal-led government in Delhi banning surge pricing.
  
• Cab aggregators such as Ola and Uber justify hike in fares on the basis of demand and supply mismatch.
  
• Private taxi players monitor surge in demand with the help of algorithms that help them set the price.
  
• Issue raises the question of state trying to intervene and fix prices as was done in the licence-permit raj.
  

Flawed Logic of Demand and Supply

The Ola and Uber cab saga is meant to be about demand and supply. But when it leans on an artificial demand created by the hubris of a state administration, it is out of whack.

There is nothing capitalist about this. It is old-fashioned profiteering from protectionism – a neo licence-permit raj, particularly if the Delhi government chooses to implement odd-even every month as is being threatened.

Just as well that Ola-Uber have beat a hasty retreat for now. Even as the so called free-market believers are sulking at their scam coming apart and allegedly refusing to ply.

It is back to the black-and-yellow cabs, the three-wheeled scooter, the regulated rogues and thieves of old, who have become ubiquitous and part of our popular culture. They’ve been trying their hand at daylight robbery since times immemorial, given half a chance at breaking the law.

Need Practical Solutions

The argument that consumers can take it or leave this new-fangled 2X, 3X, 4X pricing from Ola/Uber begs the question about how this is workable, never mind the babble justifying the move. The solution may lie in issuing more scooter-rickshaw licences and send these people packing.

Sure, these foreign-inspired aggregators, with billions in play, have tried to corner market share by loss-leader pricing, but nobody asked them to. Other expensive goods don’t justify variable pricing on the basis of how many people want to buy!  

Loot by Private Players

But at the nub, it is Ola-Uber’s very own devilish streak at play, disguised as free market work with air conditioning. And this in a quasi-socialist/semi-liberalised country, uncomfortable in both worlds, with more codicils and exceptions than straight laws. And a legal system that is broken.

Bleeding VC money profusely from their subsidies, despite deep pockets, Ola and Uber have withdrawn ‘incentives’ to freelancing drivers/cabs.

But maybe it told its cabbies, before it called a halt, that it’s okay to go on a limited spree of loot, rapine, and pillage, just until Kejriwal uncle calls off his Mengele style experiment.

But clean air apart, the next time, Ola and Uber must try conning somewhat less price-sensitive people. Most inconveniently, they happen to know their onions, out in the sun, or listing in the shade; and so do their political masters.

(Gautam Mukherjee is a plugged-in commentator and instant analyser)

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