Business models are getting disrupted by technology. Take the taxi space for instance. In the good old days, you needed to hail a cab and expect it to carry you to your destination. Cabs were dirty, drivers misbehaved and charged anything depending on how badly you wanted it. The industry had a disruption around 2007 when Meru came into being and its clones followed. They had radio taxi licence and the fares were regulated. The vehicles were owned by the companies and they charged a cut (like Rs 1000 / day or 20% of the revenues).

Cut to 2013: The startup Ola copied global model of Uber and launched its own app based system. Uber also got launched in 2014 to get a taste of India. These were just aggregators or platform providers: they matched the demand and supply sides giving greater efficiencies. They did not own the vehicles, allowing the driver to have an entrepreneurial flavor.

Today, we have a number of options: I did a comparison between the rates offered by 5 taxi companies to allow me to plan my trip.

Here are the rates for sedans in Kolkata.

rates table

Assuming an average speed of 25 kmph and no surge,  we have the following table containing what the trip would cost.

 

Costs table

This is the graph containing the overall picture.

Graph

In times of high demand, there is a surge where the graphs will shift upward for the platform players. The graphs for radio cabs will disappear since cabs will not be available at all.
Here are my observations:

  • Upto 3 km, Mega is the cheapest option (since there is no fixed component)
  • After that, the lowest cost options are shared by Taxi for sure and Uber. The difference is quite small to consider
  • After 3 km, Mega cabs is the most expensive option
  • For the second most expensive option, we have Ola (upto 9 km) and Meru (beyond 9 km)
  • It is a death knell for Mega and Meru. Meru has adopted the platform strategy, yet has not kept pace with the prices. They have rickety vehicles and people would love to avoid them, just as they avoid yellow taxis.
  • Among new age aggregators, Ola is much more expensive than TFS or Uber. Even though it can boast of having the largest market share, it may not last long unless TFS and Uber raise their prices
  • Mega and Meru have 20% night surcharge, which is not present among the newer players (who have a demand surge).  Considering lower demand, the charges must be lower instead of higher at night. During periods of high demand, you may end up paying more for the platform players, but at least there is a higher probability of getting one. For the oldies, you may not get a vehicle at all.

When I arrive at the airport, I have the following options:

  • Join the queue for so called prepaid taxis
  • Join the queue for the expensive Mega cabs (which are not available in most of the cases)
  • Use the app to call Ola / TFS / Uber
  • Use any of the shady agents waiting outside the airport whispering “Taxi, Taxi”

My personal choice would be Uber, primarily due to its direct charges to credit cards.

Overall, the biggest gainer is Maruti, whose dzire tour cars are doing duty across platforms. Not to mention, commuters like us who do not want to be hassled by the taxi drivers.

http://www.businesstoday.in/magazine/cover-story/india-taxi-market-war-heats-up-ola-cabs-uber-strategy-leaders/story/222542.html

 

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