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YatraGenie: Taxi-Aggregator Model in Danger of Collapse

Sunil Shah | June 29, 2016
Here’s a surprise: A CEO bold enough to talk about a deep flaw in the Indian taxi-aggregator business—and why it needs to be fixed quickly.

For the same distance, an operator in the US or another country in Europe, will get paid about the equivalent of over Rs 7,500.

To make things worse, cars cost about 40 percent more in India, diesel costs 20 percent more, and car maintenance is more expensive. Yet, the selling price for taxi services here is almost a tenth of what it is there.

How in this world can an operator be successful? It's next to impossible.

One of the problems is that the government often fixes the rates. And once fixed, it takes years before they are revisited.

New technology entrepreneurs like Ola, Uber and YatraGenie, make this worse by undercutting prices even further.

Are you saying that the entire cab ecosystem, in its current shape and form, is unsustainable?

Yes, that's exactly what I'm saying.  It's not long term, not until we change the pricing mechanism.

Since taxi aggregators can't change the prices of cars, diesel or car maintenance, the only way to ensure that drivers can make a sustainable living is to increase the cost of a ride. What number do you suggest?

Realistically, a driver will be able to be happy, and an aggregator will make money, at a price of Rs 26-27 per km.

At that price, a driver will be able to take home about Rs 25,000 to Rs 30,000 and will be able to afford decent education and medical for his kids.

So why don't taxi aggregators lobby the government to raise prices?

No aggregator has a right to ask the government to up the prices-not when they offer Rs 6 per km!

What you're saying is in direct contrast to the slew of hoardings claiming drivers can make up to Rs 90,000 a month.

That's marketing. It doesn't work. It's a marketing gimmick meant to get drivers to join an aggregator.

To make Rs 90,000 a month, a driver must make Rs 3,000 a day-and must drive every single day of the month.

To make Rs 3,000 a day, at an average price of Rs 10-11 a km, a driver must drive about 300 km a day! Can you imagine a driver trying to do that in a city like Bangalore?

On average, if a driver is working with a popular tax aggregator, he will probably do about 200 km a day. That's if he is lucky and is willing to work 12 hours a day.

Even if a driver is this lucky--and works 30 days a month, which assumes they never take a holiday and never fall sick--they will make about Rs 65,000 a month. From that 20 percent goes to the aggregator, leaving the driver with about Rs 48,000. Then they have to pay for diesel (about Rs 30,000 a month), the car's mortgage, and servicing. They aren't left with much.

 

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