Explained: Karnataka Government Vs Auto Aggregator Apps on 'Convenience Fee'

Bommai government plans to make 10% convenience fee a permanent fixture for aggregator apps providing auto services.

Three-wheeler autos lined up in Bengaluru amid reports of ban on Ola and Uber providing auto services in the city.

(Image: Sourav Dihingia/The Quint)

The ban imposed on auto-rickshaws linked to aggregators such as Ola, Uber and Rapido, in Bengaluru has troubled commuters. So the Karnataka High Court intervened, lifted the ban, ordering a cap of 10% convenience fee, exclusive of GST, as an interim arrangement, bringing some relief.

But, there is still no consensus about 'fair price' between the aggregator companies and the Bommai government.

The Quint spoke to commuters, auto drivers and officials in the transportation department, to understand what the flashpoint is, what could be the possible outcome of a meeting between all stakeholders, and who are the real losers over this "contentious issue".

Why were Auto-Aggregators like Ola and Uber Banned?

Aggregators like Ola and Uber, started auto-rickshaw services in Bengaluru as pilot project in 2014. The service turned into a full-fledged service in 2016. Rapido, a company native to Bengaluru also began auto services the same year.

There are over 55,000 autos in Bengaluru, off which more than 60% are attached to either Ola, Uber, Rapido or other small local aggregators. But these companies have done business in Karnataka for over six years, without licences for aggregation of auto-rickshaws. The licenses are a must under the Karnataka On-demand Transportation Technology Aggregators Rules of 2016.

In addition the aggregators were levying high convenience fees. For instance, Ola and Uber charged a convenience fee of nearly Rs 45, on top of Rs 60 which is the base fare. This led to customers paying over Rs 100 for even a short distance of 2 kms.

In response the Bommai government banned the aggregator autos, for over-charging, and for "illegally" providing auto services in Bengaluru.

But when the aggregators moved the High Court of Karnataka, its interim order saying that only a 10% convenience fee exclusive of GST could be applied on a single ride, status quo returned.

Did the Ban Help Reset Normal Fares?

Let's do some Maths.

Bengaluru-based techie Prahlad Rao travels from JP Nagar 3rd Phase to Basavanagudi in an auto everyday to work, a distance of 5.4 km. If he took a regular auto-rickshaw, it would cost Rs 75.

This is because, the minimum auto fare in Bengaluru is fixed at Rs 30 for the first 2 km and Rs 15 for every km thereafter.

But, Prahlad Rao ends up paying Rs 150 for each ride as he booked via aggregator applications, which charged him a convenience fee of more than 50% on his ride.

Yet the ban on the auto aggregators is hurting, as Prahlad and many others like him are finding it difficult to commute.

"The government decision to ban autos is bad news. Earlier, I could access autos easily using aggregating apps, But, now finding metered autos is a lot more difficult," complained the techie in an interaction with The Quint.

Meanwhile, other commuters who tried to find metered auto-rickshaws suffered not only from waiting for auto-drivers to agree for the ride, but also had to pay exorbitant amounts too.

Shourya Sarkar, a student in Christ University, who takes an auto from Indira Nagar, says some private auto drivers even charged the same as Ola and Uber, except that they pocketed the entire amount.

So, every which way, commuters were at the mercy of auto drivers.

What has Happened Since the High Court's Interim Order?

When the aggregators moved the Karnataka High Court challenging the government ban, Justice MG Shukure Kamal gave an interim order capping convenience fee at 10% of travel fare, excluding GST.

The High court also asked all stakeholders to arrive at a consensus and decide on an amount that is beneficial for all.

The Karnataka transport department called for a meeting with executives of Ola, Uber and Rapido on 29 October, but there was no consensus.

The aggregators wanted the convenience fee capped at 25% of travel fare including GST, but transport department officials called that excessive, standing by that terms ordered by the Karnataka High Court.

Speaking to The Quint, a Karnataka government official, who wished to remain anonymous, said, "The executives from Ola and Uber tried to pursue flexi-fare, also known as surge price, but the department did not back this idea. This resulted in an impasse."

What Next for Auto-Drivers in Bengaluru?

Meanwhile, the private Auto-drivers union in Bengaluru cried foul and have dubbed the meeting between the officials of transport department and executives of Ola, Uber and Rapido, an "eye-wash".

Amruthesh NP, advocate representing a section of auto-rickshaw drivers claimed that the government has completely ignored the real stakeholder—auto drivers.

Speaking to The Quint, the advocate said,

The department is corrupt and is playing games just to delay the final decision. How can the department only call executives of these big companies and ignore auto-rickshaw unions? We will raise these matters in court when it resumes hearing on 7 November.

Auto-driver Abdul Khaleel in Bengaluru also spoke about how the aggregator apps failed to cover fuel expenses, and the ban instead helped them recover the money that was being taken away in the name of commission by the mobility and aggregator companies.

The ban did not affect me entirely. I was able to find customers and quote a price which they were willing to give. In fact, the ban helped to get more money, which was once being taken away by Ola and Uber.

However, this was not true for all auto-drivers in Bengaluru. The day government imposed a ban on aggregators, RTO officials seized over 100 autos, levied fines and also sent notices to companies saying that auto services were illegal.

Reacting to the ban Tanveer Pasha, President of Ola & Uber Drivers and Owners Association and a member of Karnataka State Auto & Taxi Federation, said, "The ban will have no impact on auto-drivers. Unlike cab drivers, they continue to get business on their own. But we want the government's intervention so that auto-drivers are not penalised for the mistakes made by aggregators."

Who are the Real Losers in this Impasse?

Given Bengaluru city's poor crumbling infrastructure, bad roads and poor public transport system, most residents depend on autos to travel short distances. And ban or no ban, commuters say they are either over charged by aggregators or fleeced by private auto drivers.

Another commuter Padmaja Satish, who resides in Malleshwaram said,

"If the government bans auto aggregator apps, they should also get auto drivers to charge only by the meter. This is not happening. Earlier, aggregators levied surge prices, now auto-drivers demand money as they wish."

Meanwhile, several unions such as the Karnataka Janashraya Auto & Taxi Drivers Association, Nava Karnataka Auto Drivers Association and Nondachalakara Vedike assured citizens that they would charge commuters only based on meter.

In a statement to The Quint, Tanveer Pasha of Ola, Uber drivers and owners’ association said, "We would want Ola and Uber to agree upon a fair price. Regardless of what the outcome is, I would still urge my fellow drivers to only ply by the meter."