Research Partnership Platform8th meeting

Wednesday, 5 July 2017Room XVII, Palais des Nations, Geneva

Uber - The Competition Killer or The Competition Trigger ?

Presentation by Mr. Shirish Deshpande

ChairmanMumbai Grahak Panchayat (MGP - India)

India

This material has been reproduced in the language and form as it was provided. The views expressed are those of the author and do not necessarily reflect the views of UNCTAD.

The Competition Killer or

The Competition Trigger ?(India Case Study)

U B E R

By

Adv. Shirish Deshpande,

Chairman,

Mumbai Grahak Panchayat

(MGP - India)

Intra- city travel : Entry of the players

Black&Yellow

Since

1968

Auto Rickshaws

Since

1984

Radio Cabs

Since

Meru : 2007/ 08

App based Taxis

Ola : 2010

Uber : 2013

Parameters Auto Rickshaws Black & YellowTaxis

Radio Cabs (Meru& Mega)

App Based Ola & Uber

Structure Owner-driven ordriver-drivenrickshaws and

Unionised

Owner-driven ordriver-drivenrickshaws and

Unionised

Self owned cabs driven by drivers

Aggregators

Pricing structure Fixed by transportregulator, highly

influenced by unions

Fixed by transportregulator, highly

influenced by unions

Fixed by transportregulator

Unregularised, dynamic,

algorithmic pricing

Typically preferred fare

Long distance fare Long distance fare Long distance fare/ airport fares

Any

Frequency of refusal

Very high Very high Less Rare

Type of meter Analogue till 2012, electronic since

Analogue till 2012, electronic since

GPS based No- meter, fare shown on

Smartphone/ email

Why the Perception Survey?

Strong opposition by traditional and radio taxi/ auto drivers to entry of Ola/ Uber

Frequent agitations & even strikes to protest against their operations

General satisfaction of passengers using Ola/ Uber fares and services quality

Hence the Perception Survey of Passengers by MGP – India in 2016

City Responses (out of 76169) % Responses

Mumbai 62691 82.31

Thane 6547 8.60

Navi Mumbai 3195 4.19

Pune 1037 1.36

Mira Road/ Vasai/ Virar

443 0.57

Bangalore 172 0.23

Hyderabad 74 0.10

Nasik 64 0.08

Ahmedabad 54 0.07

Kolkata 53 0.07

Miscellanous 18492.42

MGP’s Perception Survey of Uber/ Ola - 2016

Regularity of using Ola/ Uber

11%

40%

15%

13%

21%

Population

Everyday

Several times a week

Once a week

Once a month

Not regular

Regularity Responses (out of 76169)

Everyday 8,463

Several times a week 30,143

Once a week 11,715

Once a month 9,788

Not regular 16,060

Fares of Uber/ Ola compared to rest

47%

22%

9%

22%

Population Cheaper than ALL

Cheaper than ALL taxis but more expensive thanAuto Rickshaws

Cheaper than Meru/ Tab Cab but expensivethan Black&Yellow Taxis / Auto Rickshaws

More expensive than Meru/ Tabcabs,Black&Yellow Taxis & Auto Rickshaws

Fares Responses (out of 76169)Cheaper than ALL 35,850

Cheaper than ALL taxis but more expensive than Auto Rickshaws

16,772

Cheaper than Meru/ Tab Cab but expensive than Black&YellowTaxis/ Auto Rickshaws

6,652

More expensive than Meru/ Tab cabs, Black&Yellow Taxis& Auto Rickshaws

16,895

Find Surge Pricing expensive?

65%

35%

Population

Yes

No

Opinion Responses (out of 76169)

Yes 49,887

No 26,282

Feel harassed by refusal by Autos/ Taxis

94%

6%

Population

Yes

No

Opinion Responses (out of 76169)

Yes 71,726

No 4,443

94.15

5.050.79

0,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

80,0

90,0

100,0

Very Important Important Not Important

Importance

Importance

Rate the importance of these aspects of travel [Accepting where the

commuter wants to travel]

OpinionResponses (out of

76169)

Very Important 71,716

Important 3,850

Not Important 603

66,10

31,53

2,37

0,00

10,00

20,00

30,00

40,00

50,00

60,00

70,00

Very Important Important Not Important

Importance

Importance

Rate the importance of these aspects of travel [Efficient central digital based support system]

OpinionResponses (out of

76169)

Very Important 50,345

Important 24,019

Not Important 1,805

79,8

19,0

1,20,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

80,0

90,0

Very Important Important Not Important

Importance

Importance

Rate the importance of these aspects of travel [Good condition of cars]

OpinionResponses (out of

76169)

Very Important 60797

Important 14484

Not Important 888

Rate the following aspects[Willingness of drivers to take commuters

where desired]

77

5

18

2

35

63

5

30

65

54

38

8

0

10

20

30

40

50

60

70

80

90

Good Average Bad

Ola/ Uber

Black&Yellow Taxis

Rickshaw

Meru/ Tab Cab

Responses (out of 76169) Ola/ Uber

Black&YellowTaxis Rickshaw Meru/ Tab Cab

Good 58,450 1,586 4,103 41,027Average 4,236 26,781 22,822 29,322

Bad 13,483 47,802 49,244 5,820

Rate the following aspects of [Availability of cabs]

63

19 18

11

51

38

18

433937

46

17

0

10

20

30

40

50

60

70

Good Average Bad

Ola/ Uber

Black&Yellow Taxis

Rickshaw

Meru/ Tab Cab

Responses (out of 76169) Ola/ Uber

Black&YellowTaxis Rickshaw Meru/ Tab Cab

Good 47,812 8,114 13,358 28,521

Average 14,315 38,761 32,752 34,692

Bad 14,042 29,294 30,059 12,956

Rate the following aspects [Presentability & Appearance]

70

1218

2

43

55

6

4450

46 44

10

0

10

20

30

40

50

60

70

80

Good Average Bad

Ola/ Uber

Black&Yellow Taxis

Rickshaw

Meru/ Tab Cab

Responses (out of 76169) Ola/ Uber

Black&YellowTaxis Rickshaw Meru/ Tab Cab

Good 53,460 1,537 4,640 34,812

Average 9,115 32,358 33,480 33,433

Bad 13,594 42,274 38,049 7,924

Rate the following aspects[Behavior of Driver]

Responses (out of 76169) Ola/ Uber

Black&YellowTaxis Rickshaw Meru/ Tab Cab

Good 51,244 6,209 6,724 40,725Average 10,201 41,431 33,475 30,650

Bad 14,724 28,529 35,970 4,794

67

1419

8

55

37

9

4447

53

41

6

0

10

20

30

40

50

60

70

80

Good Average Bad

Ola/ Uber

Kaali Peeli

Rickshaw

Meru/ Tab Cab

10) Are the drivers of Ola/ Uber comfortable with the mobile GPS

system?

79%

21%

Comfortable with the mobile GPS system

Yes

No

Comfortable with the mobile GPS system

Responses (out of 76169)

Yes 60,293No 15,876

11) How do you find the feedback system of Ola/ Uber

29%

28%

24%

19%

Feedback system of Ola/ Uber

Very good

Good

Satisfactory

Unsatisfactory

Feedback system of Ola/ Uber

Responses (out of 76169)

Very good 21,838Good 21,114

Satisfactory 18,426

Unsatisfactory 14,791

12) Would you like to have GPS based meters installed in Ola/Uber?

73%

7%

20%

GPS based meters installed in Ola/Uber

Yes

No

Can't Say

GPS based meters installed in Ola/Uber

Responses (out of 76169)

Yes 55,620No 5,003

Can't Say 15,546

13) Are Ola/ Uber offering better option of travel?

80%

20%

Ola/ Uber offering better option of travel?

Yes

No

Ola/ Uber offering better option of

travel? Responses (out of

76169)Yes 60,939No 15,230

44

21

11

7

5

3 3 6Uber

Ola

Taxi for sure

Meru

Easy Cabs

Quick Cabs

Mega Cabs

Others

44

17

10

11

7

34 4

Uber

Ola

Taxi for sure

Meru

Easy Cabs

Quick Cabs

Mega Cabs

Others

50

14,6

8,5

11,2

7,5

2,3 3,7 2,2Uber

Ola

Taxi for sure

Meru

Easy Cabs

Quick Cabs

Mega Cabs

Others

UBER Market Dominance – Delhi/ NCR By Total fleet size (%) By Active fleet size (%)

By Total trips per day (%)

Source : Report 30.9.2015 of NewAge Tech Sci Research Pvt.

Ltd.

0

5

10

15

20

25

No

v-1

3

Dec

-13

Jan

-14

Feb

-14

Mar

-14

Ap

r-1

4

May

-14

Jun

-14

Jul-

14

Au

g-1

4

Sep

-14

Oct

-14

No

v-1

4

Dec

-14

Jan

-15

Feb

-15

Uber Black (in INR)

Average (in INR)

The average market price of radio taxies exisiting in Delhi – NCR before the launch of Uber was about

INR 23/ km

Uber Black Uber X Uber Go

Nov-13 20 Not launched Not launched

Jun-14 18 15 Not launched

Nov-14 18 15 12

Feb-15 12 9 7

Predatory Pricing by UBER

0

5

10

15

20

25

Nov-14 Dec-14 Jan-15 Feb-15

Go (in INR)

Average (in INR)

0

5

10

15

20

25

Uber x (in INR)

Average (in INR)

Predatory Pricing by UBER

No Market dominance by Uber

Hence

No question of predatory pricing by Uber

Competition Commission of India rules

Prima Facie Market Dominance by Ola

Predatory pricing under investigation

Competition Commission of India rules

App based taxi journey in India

2013: Uberlaunches in India

2014 : Ola launches its app

March 2016 :

Uber claims to have 35-40% of the market share

June 2016: Uber and Ola operating in over 20 cities with 3,50,000 drivers

2017: Number of vehicles affiliated dropping by almost 25% due to lesser incentives to drivers

June 2017: Ola & Ubercome under regulatory framework

* No Predatory Pricing allowed

* No Surge Pricing allowed

* Uber & Ola to operate within minimum & maximum fare slab

to be prescribed by Transport Regulator

State of Maharashtra notifies Regulations to regulate App based taxi services

Transport Regulators Decide To Regulate

Uber & Ola in India

Pre - 2013

• High fares

• Over-charging

• Poor quality vehicles

• Frequent refusals

• Rude behavior

Post - 2013

• Competitive/ discounted fares

• Surge Pricing

• Better quality vehicles

• No refusal

• Good behavior

Taken for a ride? (2013 – 2017)

Category 2013 2014 2015 2016 2017

Auto Rickshaws

Switch from mechanical

to electronic meter

Protest against Ola/ Uber entry

Go on strike against Ola &

Uber

Go on strike against Ola &

Uber

Plan to introduce own app

TaxiSwitch from mechanical

to electronic meter

Protest against Ola/ Uber entry

Go on strike against Ola &

Uber

Protests continue

Plan to introduce own app

Meru/ Mega Cabs

5000 cabs10,000 cabs, plans to grow

Ola’s revenue crosses Meru’s

revenue

Legal challenge to

Ola/ Uber

Struggling to survive

competition

Uber/ OlaNew entry,

Unregulated operations

Predatory prices,

incentives to drivers

Predatory & surge pricing

Lesser incentives –Higher surge

Prices to be regulated –(Min/Max)

Way forward

Players

Live and let live

Modern technology within regulatory

framework

Legal accountability&

transparency

Passengers

Wider and better choice

Comfort & convenience

Competitive Regulated fares

Drivers

More secured

Better conduct

Better living

Thank you!

Acknowledgement

Contribution and assistance rendered by

Ms. Varsha Raut, Head Advocacy & Campaigns, MGP India&

Mr. Rishi Saneacknowledged with gratitude

Adv. Shirish Deshpande,

Chairman,

Mumbai Grahak Panchayat

(MGP - India)