Is Ola Now Overcharging Their Customers?

I was very thrilled with the launch of taxi aggregators Ola, Uber and Taxi for sure in Bangalore. The app based interface brought ease while traveling within the city.

As in these days of e-commerce, we have the bonanza of discounts and the promoter throws in all sort of possible freebies. Similarly, when Ola started they provided discounts with coupon codes, discounts with Ola money to make people start using their e-commerce wallet, first ride free whenever a new category of service launched. Initially the promotion is understood. However, apart from the promotion their rates earlier made sense. Now a days on many occasions the pricing is hard to make sense.

Let’s take an example of my recent ride on Ola during normal hours (that is no peak surcharge).

Vehicle category: Prime

Car model: Toyota Etios

If we do a breakup of cost per KM, than for the first 4 km its Rs 20 / KM. Then for the next 8.98 KM it is Rs 13 / KM.

Also, they charge based on the total travel time – Rs 59.77 for 59.77 min. So there is also a time charge of Rs 1 / minute.

I think here we have a contradiction. Is it fair to run two meters at the same time? One based on distance and one based on time. Ola is charging its customers based on two parameters at the same time. I think, the meter based on time should run only for wait time. That is when the driver is waiting for the customer after he arrived at the customer’s location and when the vehicle is at a standstill in traffic.

Now let’s take an example of a ride deemed peak hours by Ola.

Vehicle category: Prime

Car model: Swift Dzire

The travel was done in the month of May, 2016. Notice the peak pricing cost of 1.5x – Rs 170.53. If I deduct the peak pricing cost of Rs 170.53 from the total bill of Rs 541, the actual bill will be Rs 371. I can somehow fathom the amount of Rs 371 for a travel distance of 21.14 KM, which gives a cost of Rs 17.54 / KM. But an amount of Rs 541 to cover a distance of 21.14 KM within Bangalore city looks far fetched. Here, they are charging on 3 parameters at the same time – distance, time and peak pricing 1.5x. Looks like they are trying to make money in name of making vehicles available and deeming peak hours. Also, they might be doing this to lure drivers. But Ola should understand that charging unreasonable price will cost it customers in the long run. More importantly it will hurt ridership during the so called peak hours.

I have observed the peak hours pricing for sometime and noticed a pattern. Now I can more or less figure out the peak hour timings and I will try my best not to travel during these hours unless really needed.