IMPACT OF OLA AND UBER ON TRADITIONAL TAXI DRIVERS

 IMPACT OF OLA AND UBER ON TRADITIONAL TAXI DRIVERS

INTRODUCTION

Sharing economy is a socio-economic model concerned with the sharing of resources. It is an economic model characterised by peer-to-peer (P2P) based activity of acquiring, providing, or sharing access to goods and services. Contrary to the traditional business model of companies hiring employees to produce products to sell to consumers.

 It includes the shared creation,production,distribution,trade and consumption of goods and services by different people and organisations. Many a time these are facilitated by taking advantage of the numerous doors opened to us by technology. Usually through a community-based online platform.The history of taxi services have their roots in 20th Century London and New York From the early days of horse-carriages for hire in London to fleets of Crown Victoria’s weaving about NewYork. Horse-drawn carriages in London known as hackney carriages offered rides to pedestrians in densely populated areas, as early as 1605. With each passing year, this service gained more and moral popularity and other European countries who began to take part in this practice. Regulations were established for hackney carriages in 1635. Legislation became increasingly restrictive over the century and coachmen required a license in order to provide this service by 1662. The next big innovation in hailing services was called the hansom cab in 1834. This vehicle was a much smaller carriage that was capable of moving more quickly, and only required one horse.The first battery powered taxi cabs arrived in London at the start of the 20th century and they were quite noisy, earning them the name' hummingbirds.' Eventually several changes came along such is improved motors and other additional upgrades. Taximeters were also introduced along with this and this is where the word 'taxi' came from. Hummingbirds were first introduced in New York in 1898 and were replaced by gas powered engines in 1907. The yellow colour taxi which our eyes are very accustomed to found their way to the roads in 1967. Crown Victoria made by Ford what's the go to choice for taxis in the olden days but they were soon replaced by newer and improved models. The last of the batch were destroyed by Hurricane Sandy in 2013.

Currently, the market leaders of online taxi services market in India are OLA cabs which operates under ANI technology Private limited and Uber India systems private limited. OLA cabs has it's roots in India and was developed by two IITians, Bhavish Aggarwal and AnkitBhati in 2010. It is headquartered in Bangalore, Karnataka. Uber on the other hand, is a foreigner and has its headquarters in San Francisco, California. It was founded by Garrett Camp and Travis Kalanick in 2009. Although taxi apps have altered the taxi industry tremendously, we are now looking at a future where autonomous cars will be a go-to choice. Several companies are experimenting major cities (with drivers). The challenges in implementing driverless taxi are manifold, and it will take several years before driverless taxi become a household matter, but the ball has already started rolling and several years down the line we will be seeing AI-powered car moving through the roads. Taxi system has been around since the early 20th century. From the hackney carriages of London and NewYork to the AI-powered driverless cars of the future, the importance of taxi services is increasing day-by-day. Online cab booking services like Ola and Uber are the biggest players in the market today and this along with COVID 19 pandemic has hit the traditional taxi sector tremendously.

NEED AND SIGNIFICANCE

It is an explicit fact that the emergence of taxi aggregators has immensely changed the landscape of the Indian taxi service. The influence of these new elements has spread across various shareholders, services and services providers. However, this has also meant a complete overhaul of the traditional taxi service models in the Indian market. The case study at hand is an attempt to identify and analyse the effect the new model has brought on the taxi industry , focusing on the quite evident benefits it has given not only to the customers of the taxi service but also to the drivers who work under it’s wing. The integration of modern technology such as mobile apps and GPS to the service has improved the flexibility and convenience concerning hailing a cab, in terms of a customer, it also immensely improved the efficiency of resource and labour utilisation.

It is also relevant in finding out the key factors that helped the taxi aggregators to attract such a huge consumer base and labour force, to such extents that the model of gig economy has been propelled to never before seen heights in the Indian economical landscape. It also sheds light on the pricing policies and incentive package adopted by the aggregators to facilitate the inflow of demand from both the consumers and drivers respectively.Moreover, the study also analyses the impact the Covid-19 scenario has had on the popularity and performance of the service provided by taxi aggregators such as Uber and Ola.

 REASONS FOR THE IMPACT OF OLA AND UBER ON TRADITIONAL TAXI DRIVERS

Under the traditional taxi service setup, taxis in operation were owned by taxi agencies with drivers employed as permanent staff.However, under the present gig economy setup presented by online taxi services like Ola and Uber, owner of taxis is distributed between the drivers and agency, with the drivers taking a overwhelming majority. The fuel price hike has naturally effected the service providers negatively. Infrastructural development has not taken place to levels to attain the prerequisite required to transfer the service to more renewable and cost effective energy consumption paths.

A rise in the price of fuel brings about a rise in the cost of production and in turn which raises the price of all commodities. They are over spending on petrol. They are required to pay a higher price for travelling the same distance but they cannot increase the fare accordingly as that would result in people not using their services.They are also unable to raise the price due to price ceiling put forward by the government. Also, in case of old vehicles, the mileage is low and they cannot afford new and improved ones.

The adoption of modern technology into the taxi service sector has improved the cost effectiveness of the sector. This subsequently has improved their profit margins and their financial position to bring about further innovation in terms of their service. It is this financial prowess that enabled online taxi providers to attract huge crowds of customers and drivers, through various incentive and pricing policies.

Ola and Uber are ride-hailing services that use smartphones and internet to form a bridge between those looking for a ride and those willing to provide one. Although the have many advantages from the customers’ perspective, things are not so bright when we look through the eyes of a traditional taxi drivers or even from those who drive Ola/Uber. They pose a competition to traditional taxi driver with their attractive discounts and rates that do not increase in proportion to the increase in fuel price.

People prefer them for short distance and even long distances online taxis are preferred owing to their low rates. Some even say that their job has been reduced to half. The ones that contradict this statement say that they are not much affected, because people still prefer traditional taxis for long travels and trips. Some say that at first, they were badly affected by it, but at present things are better. Some areas are not affected because they are not popular in some inward areas. Some are not affected because it hasn’t flourished in the tourism industry. Although local trips are reduced because of them,but it doesn’t affect long trips.

The coronavirus pandemic has affected the taxi and limousine services market across many countries. In most of the states, shops and businesses have shut down and offices have emptied out, and this has brought a decrease in the demand for taxi services. The Indian government declared lockdown once the country started seeing increase in coronavirus patients across the country. This has highly impacted the earnings of taxi drivers, because in lockdown,ride hailing services are also restricted to operate. Only a few taxi services are allowed to provide emergency services with proper approval. For instance, Ola Cabs, a ride hailing cab service company in India, requested the government for loan waivers for drivers, and a delay in tax payments, so that they can make up for lost income due to the coronavirus impact. COVID-19 has severely hit Tourism And Hotel & Hospitality Sector business and the sector has come to a standstill in the short term. While the sector was coming out of the woods after the liquidity crisis initiated by the IL&FS fiasco and subsequent fallouts of various financial institutions, the pandemic outbreak could further impact the Tourism and Hotel & Hospitality Sector.

The onset of Covid brought a morbid decline in customer demand for taxi services. Government restrictions further deteriorated the health of the sector. This situation prompted individuals to use their own private vehicles and the small fraction that availed services were for meeting emergency needs. Customer markets that demanded long distance services and connections to other long-distance transportation facilities, like airports and railways were restricted. 

The taxi sector felt the effects of a dwindling tourist sector, as tourists, a critical demographic market of the taxi industry was utterly wiped out. The lack of revenue due to negligible demand doubled up with frequent hicks in the price of fuel to drastically pulled down the financial situation of the drivers.

CONCLUSION

Since online ride-hailing services came about in 2010, the burden on traditional taxi drivers have increased manifold. It caused a dip in those that depended on traditional taxis for commute. The increasing fuel price is an important factor that had a negative impact on traditional taxi drivers. This increases the cost per ride which causes their profit margin to decrease. They are also unable to compete with the attractive discounts that Ola and Uber have to offer. The arrival of the uninvited guest, COVID 19 further add to their misery.

A major impact on traditional taxi drivers is the ever-increasing fuel price. This affect them in numerous ways. It reduces their profit margin since they are compelled to send a major portion of their income on fuel. They are in no position to increase their fare in accordance with the rising fuel price because the moment they do so, the customers will switch to the much cheaper online taxi services such as Ola and Uber. The traditional taxi drivers also have to bear the maintenance costs of their vehicles such as oil change, use of garage etc. These further create a decrease in the money that they are able to set aside for themselves.

More people have started to prefer Ola and Uber for short distance since they are much more easily accessible. In case of traditional taxis, they have to be booked in advance, which is not very convenient. This is a factor that pulls more people away from traditional taxis and towards online taxis. More people have begun to believe that online taxi services are much safer because of the availability of GPS services, option to verify driver etc.

Even with all the advantages and options they have to offer, traditional taxis are still preferred for long trips. Flexibility is one of the major reasons that contribute to this. Traditional taxis are still the kings in inward areas since online taxi services are yet to create their mark there. With the COVID situation getting better, people have resumed trips and travels, and the tourism sector is healing. This is a ray of hope for traditional taxi drivers.

As we mentioned earlier, even with all the benefits, the impact of online taxi services on traditional taxi services is still severe. Therefore, government must take the necessary steps to ensure their welfare. These measures include but is not limited to altering the maximum fair price, improving the condition of the roads, providing better parking infrastructure, revising the existing subsidies and Batta, reducing the price of fuel, alter and extend the ceiling charges to the maximum, provide better unemployment incentives, introduce additional income opportunities. They also face a problem of having to pay a high ‘kshemam’ tax and at the same time, they do not receive any of the benefits which should come with it. Online apps were launched in 2021 to bridge the gap between traditional taxi drivers and customers, but no further steps have been taken on it to make it useful. There must be more innovative policies from the part of government to help them and increase their welfare. 

REFERENCES

http://www.kerala-tourism.org/kerala-transport/ 

https://www.sciencedirect.com/science/article/pii/S2590198220301664 

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8132765/ 

https://www.sciencedirect.com/topics/immunology-and-microbiology/demography 

https://www.prnewswire.com/news-releases/impact-of-covid-19-on-the-taxi-and

limousine-services-market--tbrc-report-insights-301054745.html