Just yesterday I had a group project for college, a presentation that we had to make on a company given to us, and I had to do one on Ola Cabs. It was great timing; I’d just recently started using the service not too long after I first heard of it two or three months ago. Ola Cabs is basically Uber, except they accept cash. You point to your location on your smart phone and an AC taxi arrives, picks you up and takes you wherever you want to go. It’s slightly more expensive, but worth it if you want a comfortable journey, or the taxis that listlessly roam around in your area still refuse to go where you want to. Which is the biggest problem that plagues taxi drivers in the city of Mumbai.
It’s time for change in the Taxi Industry.
See, the thing is, this is 2015. Time has caught up with taxi drivers, as it tends to do with everyone. And what most of them don’t realise is that companies like Ola, Uber, TFS, TabCab, and even Meru are slowly eating into their business in a way that’s not only visibly apparent but also frightening for anyone whose means to their bread involves driving taxis for a living. If you’re a black cab driver, it’s time to buckle up, because the next few years are going to be tough.
Pictured: me, not a taxi driver, giving a presentation. Picture Credits: Craig Sir
The taxi business is a $10 billion industry in India. Ola Cabs is currently valued at $2.4 billion, and they have more than 100,000 taxis in their fleet across the country, which increases each day. Uber’s Indian valuation isn’t quite clear but it made headlines a few months back when the company was valued at $41 billion. Yes, that’s right. A tech-company in California that doesn’t own a single taxi in its entire operation is valued at over four times that of the entire Indian taxi industry. You could argue that it’s a bubble that’s soon going to pop – that the valuation is inflated, like much of Silicon Valley currently might be. I wouldn’t disagree. But the fact is, a few lines of code has enough value today, in the planet we live in, that it can make an entire means of livelihood for 95,000 taxi drivers in Mumbai irrelevant. Uber and Ola is to taxis what set-top boxes were to cable TV. There is confidence in these companies, and where there’s confidence, there’s investment. Where there’s investment, there’s power and where there’s power, there’s change.
The Fare Refusal Problem
The day before yesterday my father was coming back from work in Powai. He tried to hail one of the many taxis, whose drivers languorously peered around with their front door open. They all said the same thing; they wouldn’t go. A fare of over Rs. 250 refused, why? Because they think they can afford to do it. For many years these taxis have been an integral part of our public transport infrastructure, and society at large always sort of forgave these taxi drivers for refusing fares. They don’t like it, but it’s too much hassle to file a complaint in a country rampant in government bureaucracy and corruption. I won’t go into the legality of it either, because in whatever state of prohibition fare refusal might be in, drivers are rarely perturbed by the thought of a complaint.
Pictured: taxi driver wondering what he has to do to not be a taxi driver, after refusing a fare to a gentleman trying to get home to his wife and kids. Picture credits: my dad
I understand why fare refusal is a thing; I understand their plight as well. They work over 12 hours a day in blistering heat in a city where traffic is equivalent to parking. But, unfortunately, the 21st century is catching up.
Organisation of the Taxi Industry in India
In our $10 billion industry, only about 10% of taxis are ‘organised’, meaning only about 10% of them know where to be at a certain time to bridge the demand and supply gap, which is exactly what Ola and Uber do; bridge the gap between demand and supply for taxis. They’re turning this rampantly disorganised and flailing market into an organised and efficient one, and they’re doing it very quickly –at over 25% growth per year. With that kind of growth, and with that kind of possibility of expansion, I find it a very logical conclusion to leap to when I say that our Kali Peeli boys have very little time to up their game. In 6 months they’ll really start to feel the wrath that’s already turned many of them into becoming an Ola or Uber driver themselves; a very sizable portion of our sample size for a survey we conducted as part of our project said they’d be willing to pay the premium if these services became more ubiquitous. Because things like dirty seats, disheveled interiors, lack of basic courtesy or safety or communication skills, and the simple lack of an AC in forty degree weather is a very easy thing to ditch when there’s a better alternative.
I’m not saying black cabs will go extinct soon. They won’t. But pressure’s already building up as more and more of them start scrambling towards more lucrative jobs under these companies, and the ones that remain, suffer due to lack of customers. One problem in this hypothesis is that Ola and Uber don’t have a sustainable business model, and as soon as that initial investor confidence runs out, which could happen for any reason – anything from burning too much money too fast, to having Bhavish Aggarwal pull a Rahul Yadav – as soon as confidence runs out, black cabs are back in business.