Govt may cap Ola, Uber driver charges; industry calls it a bad idea

The Union transport department will soon float draft guidelines for app-based taxi operators like Ola and Uber which will, among other things, propose a cap on the commissions these companies charged from drivers. Though this would be a welcome move for drivers, the industry does not seem impressed: The fear is that any meddling with natural market dynamics might cause more harm than good.

Driver charges are dynamic but typically fall in the range of 20 per cent of the trip fare. According to a report, the government is considering capping it at 10 per cent.

The move, if taken up as is, will directly affect the earnings of cab aggregators, which are already operating in the red, thanks to a price-sensitive nature of the market. Ola and Uber — operating in a duopoly market — constantly try to out-do each other with cheaper fares and driver incentives.