Why 'Kali-Peeli' Taxis Could Still Beat Ola And Uber To The Finish Line

09/11/2015 8:11 AM IST | Updated 15/07/2016 8:25 AM IST
Zubin Shroff via Getty Images

Like many others, I don't own a car. I have been using all kinds of taxi services starting from Mumbai's special kaali-peeli (black and yellow) cabs to Meru to Tab Cab to Taxi for Sure (TFS) and Uber. By most media accounts, Ola, TFS and Uber (OTU) have revolutionised the commuting experience. Taxi fares have fallen. City people now have many more options to choose from. They don't need to spend money on buying vehicles. Why would they if these cab services can ensure a safe, air-conditioned and comfortable journey for fares as low as that of an auto-rickshaw?

No surprise, then, that traditional kaali-peeli taxis are really scared of the new arrivals, and are finding it difficult to compete with bells and whistles such as mobile apps and GPS. In fact, Mumbai's traditional cabs even held a recent strike to register their protest.

"[D]espite all the money that investors are pouring on Ola and Uber, the kind of service their customers are actually getting can't be described as 'revolutionary'."

Investors, on the other hand, seem to love Ola and Uber if showering money on them is any indication. Well, you have to like their asset-light business models. No surprise, Uber is now valued at an unbelievable $50 billion even if it doesn't own a single vehicle -- a real success of disruptive sharing economy. Ola is set to reach $4.5 billion; has a fleet of 200,000 cars and presence in over 100 cities. It was voted as the best startup company of the year at ET Startup Award 2015.

However, despite all the money that investors are pouring on Ola and Uber, the kind of service their customers are actually getting can't be described as 'revolutionary'. These new age taxi companies are good at using technology for booking or locating a cab or passenger and economising the use of vehicles. They are good for the environment too as they reduce the need for owning so many vehicles. However, riding with them is not free of problems, and I'm not just talking about isolated cases of sexual assault by drivers.

If you ask a number of friends or check informal chats on social media or look at the comments section of online articles covering news on Ola, TFS and Uber, you'll find that many passengers are disappointed and angry at the poor service and responses to complaints. Let me share my own experiences with these new age cabs here, having taken 100 rides in the last one year or so with Ola, TFS and Uber.

Misleading advertisements like ride@9/KM are rampant. However, a "Rs9/km" ride may actually have you shelling out anything from Rs 15 to Rs 50 for a kilometre. I once paid Rs 310 for a 7km trip with Ola on a Saturday night. Nevertheless, non-peak hour rides are relatively cheap if you can really get them.

In case of Ola (and Uber), you usually need to book a cab 15-20 minutes in advance. What if you are ready to go to office, and it says no cabs available or wants to charge you 50% or 100% extra for peak hours rides? Will you drop the idea of going to office just because it would cost you more? Thus, like me, you may go for Taxi for Sure that allows advance bookings.

The problem starts once the booking is done, and you have to deal with cab drivers. Almost once in every five to six times, the drivers don't turn up. They either won't take your calls or dish out an excuse: "I have not taken your booking" or "I've been in an accident" or "My tyre is punctured" or "I simply can't come". What's the use of a message that says your trip has been upgraded for same fare if the trip itself doesn't happen?

Earlier, cab drivers would short-distance trips. To counter that, cab companies introduced incentives based on the number of trips completed. The result: the drivers now try to avoid long-distance trips. Since, cancelling a trip involves a penalty, a clever driver simply switches on the meter without taking in the passenger.

"Poor treatment of passengers and poorer disposal of complaints by new-age cab companies will make space for tried-and-tested kaali peeli taxis to bounce back..."

After travelling for a kilometre or two, the driver presses the end trip button. The trip is officially completed. The driver pays the cut i.e. 20% to 30% of the minimum fare that can be as low as 18 to 20 rupees to the cab company from his own pocket, and claims incentive that can be as high as Rs 200-260 per trip depending upon the number of trips completed. Obviously, many such trips are never made by the actual passengers who book the cabs.

In the race to out-compete rival cab companies, cheap fares and freebies are relied on to hook passengers, and generous monetary incentives to lure drivers. However, serving customers well --repeatedly and consistently over a longer period -- is the key to survive in any business. Technology can help but it can't be a substitute for quality service. Many of the cab drivers that most app-based cab companies rely on are provided by small-time tour operators who are used to fleecing their customers at least in India. Disciplining them is not easy.

At the moment, these new age cab companies are assured of investors' money coming in without much questioning about rate of return, but investors will eventually ask for return, and fares will have to be increased. Once that happens, passengers used to cheap fare will cease providing their custom while those who don't mind paying for quality service will demand higher standards in a buyers' market where a variety of options only seem to be multiplying. Besides, transport authorities are freely giving new permits for kaali peeli taxis and auto rickshaws that will further add to the supply of transport. Taxis -- even if the fares are low -- are not often used by low-income people who generally use the highly subsidised public transport system. Thus, the game can't be about cheap fares only.

Poor treatment of passengers and poorer disposal of complaints by new-age cab companies will make space for tried-and-tested kaali peeli taxis to bounce back and regain customer loyalty.

Kaali-peeli taxis have several advantages over Ola and Uber despite the new entrants' technological superiority. The most obvious is flexibility. In case of kaali peeli taxis, no prior booking is needed. No calls to make. The passenger just has to stand near the road, wave a hand, get in and the ride starts. This is how Mumbaikars have known kaali peeli taxis.

So, dear Ola and Uber, unless you want to close down in the long run, here are some suggestions: please improve your customer care. Manage your drivers well and everything will fall in place. One more thing: you guys are spending too much on advertisements and free rides. Please cut these expenses. Regular passengers like me are not looking for freebies but assurance that taxis will come for sure and drivers will behave.

I rest my case.

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