Uber's surge pricing has always been a matter of controversy, around various cities worldwide. Whether be it New York, Beijing or even New Delhi, Uber has always been criticized for 'exploiting' customers with these exorbitant rates for their cabs.
The odd-even car pollution rule is on in Delhi till the 30th and Uber is the saving grace for a lot of office-goers. Once again, Uber is notoriously applying surge on their rides in Delhi and a lot of customers are complaining. So much so that these have concerned the Delhi Chief Minister, who on Monday called for a serious meeting regarding the Uber issue.
In lieu of these events, Uber has apparently suspended their surge pricing for the time being. But, is the government intervention really necessary in this kind of complex business? Is Uber's surge pricing unethical or just a clever marketing tool?
Here are some pointers that will help you take sides between the Delhi government and Uber with their surge pricing.
What exactly is Surge Pricing?
Given the threat to the livelihood of our partners, at the expense of reliability, we are temporarily suspending surge with immediate effect— Uber Delhi (@Uber_Delhi) April 18, 2016
Let's start with the basics here. Surge pricing is a method of scientifically increasing the normal taxi fare, so as to match the supply and demand of a particular area. Uber claims that a surge in normal prices motivates more and more drivers to reach that location for picking up customers. This, in turn, improves the supply and helps the most important customers to get on first.
What are the cases FOR surge pricing?
- The inflated rates, whether 2x, 3x or 4x, go directly to the driver partner himself (after Uber's cut of course). The argument lies within the fact that their livelihood is on the line.
- It is a perfect tool for market management that completely takes over the forces of demand and supply. This is how an organization should function in a free market.
- Only the one, who needs the cab the most, gets it. For example; if you are booking a cab to get some dinner and there's another individual in an emergency. In the scenario where there is just one cab available, surge pricing will help the latter ensure him a cab for respite.
What are the cases AGAINST Surge Pricing?
- The Delhi government's argument is that surge is straight out illegal. Tampering with any kind of public or private transport pricing-after rate approval from the authorities-is 100% illegal and unethical. It is a sort of fraud with the customers.
- There is currently no clear-cut explanation as to why and when surge pricing is applied by Uber. As a result of the methods being vague, some claim that the taxi aggregator dupes customers on a daily basis.
- Another argument claims that if supply is the issue, Uber should get in more driver partners. This is quite possible in Indian markets and actually results in more revenue for Uber.
What are the consequences of the suspension?
As the suspension is self-applied by Uber, there is no news as to when it ends. But, after Delhi government's strict language over these practices, Uber would definitely want to avoid another ban in the capital. It is expected that this suspension would thus continue for the next couple of months atleast.
If the city's residents are still able to take cars without much delay, then it could rip through the company's stand that surge pricing is an important component for their business. That, combined with customer pressure to protect individuals from price spiking could have a big impact on how the company operates worldwide as well.
Meanwhile, autorickshaws and e-rickshaws are another alternative to the taxi cabs and older players like Meru and EasyCabs also offer point-to-point taxis, but at a much higher rate.