Delhi government wins the war against surge pricing. Uber ends surge pricing in the capital

It looks like the Delhi government has won the battle against Uber’s surge pricing in the national capital. Several reports in the media today suggest that Uber has permanently dropped its surge pricing in Delhi. They claim that in a letter sent to the Transport Commissioner, Uber stated that the per-kilometre fare charged on its platform in Delhi will not exceed the government-prescribed rate.

Until last month the San Francisco-based cab aggregator and the Arvind Kejriwal-led government were at loggerheads on surge-pricing. Though Uber had temporarily suspended surge pricing during the second phase of the odd-even scheme in the city, it had brought back surge-pricing in Delhi.

At that time, Uber Delhi had tweeted:

The battle against surge pricing began when Kejriwal had started receiving complaints from regular passengers about how surge pricing was affecting them. The government then took action on those complaints.

In a conversation with YourStory, Rakesh Agarwal, Founder and CEO of Delhi-based taxi service startup Magic Sewa, said:

“In Delhi, surge prices up to 5x-7x are common in both [Ola and Uber]. Section 67 of Indian Motor Vehicles Act clearly states that the authority to decide the charge lies with the government. But Ola and Uber decide the fares for their commuters. Ola used to show the surge pricing on their rate card earlier. Now it is shown on the estimate tab once you feed your destination.”

The government-prescribed rates for the services are at Rs 12.50 per km for radio taxis, Rs 14 per km and Rs 16 km for non-AC and AC taxis. For radio taxi cabs, it is at Rs 23 per km. The night charges, from 11 am to 5 pm, are marked at 25 percent of the fare.

Surge pricing has brought plenty of trouble to both Ola and Uber not only in Delhi, but also in Bengaluru. Last month, both Ola and Uber cabs were seized in Bengaluru, after the authorities received complaints from passengers about surge pricing. Over 70 cabs in Bengaluru were seized in the past week, of which 50 were under Uber.

This cutting of surge pricing will be a big blow for the cab aggregators, as they normally run on low charges during non-surge times and cash in on the surge periods. Many argue that surge pricing is part of the economics of demand and supply. Many also add that while the government needs to set a cap on surge pricing, the real price should actually be determined by demand and supply.