Complain and we'll act: Government on surge pricing by taxi aggregators

BENGALURU: Karnataka, which has made new rules that ban `surge pricing' by cab aggregators is on the horns of a dilemma and seeking support from passengers to deal with the problem.

Earlier this month, the state banned the likes of Ola and Uber from raising fares during times when demand for cabs outstrips supply but it believes that the practice of `surge pricing' continues. The tricky part is that the government cannot take action unless passengers complain, which is why transport minister Ramalinga Reddy has asked users to come forward if they have a problem with surge pricing.

“We request the people to come forward and bring such instances to the transport department's notice by way of complaints and we will take action,“ he told ET.

Some users pointed out that prices surged by more than five times on Monday evening. The new rules governing cab aggregators, which included an implicit ban on surge pricing, came into effect on April 2.

Ola and Uber, the dominant players in this space, did not immediately reply to questions from ET. They have also stayed silent on Karnataka's new rules.

Cab aggregators argue that dynamic pricing is a function of demand and supply . By fixing higher fares when demand exceeds supply , the aggregators say they are able to entice more drivers onto the roads.When enough drivers are on the road, prices fall automatically , they say.

The April 2 Karnataka On-Demand Transportation Technology Aggregators Rules, 2016 rules capped fares for taxis at Rs 19.50 per kilometre (for AC cabs) and Rs 14.50 per kilometre for (non-AC cabs). The rules allow cab aggregators to charge 1.5 times the regular fare only between 11 pm and 5 am.

“We'll cancel the vehicle permits.We already have the ruling with us,“ said Narendra Holkar, the joint commissioner for enforcement in the transport department.