In order to gain market share, Uber and Ola attracted driver partners by announcing huge incentives. They also attracted customers by offering low fares. But, these subsidies will not last forever. There will be a time when Uber and Ola will have to reduce their losses and start making profit. It seems, that the two companies have already started working in that direction.
Uber and Ola, the two leading taxi hailing services have increased fares in major cities. At the same time, they have reduced driver incentives.
In major cities across India, Ola and Uber have increased their prices and have also reduced incentives offered to drive partners. For example, in 2015, OLA used to offer incentive of INR 5,500 to driver partners for completing 12 trips. Today, the incentive has reduced to INR 4,000. Uber too has applied a similar change in their driver incentives program. As per a report, the reduce in driver incentive ranges from 20-40%, depending on the city.
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Speaking about increase in fare prices, Uber announced last week that in Delhi NCR, they will charge INR 20 per km for trip distances above 20 km. Though till 20 km, they will continue charging rate of INR 6 per km.
An invester in Ola Cabs, said – “The focus is on building a real business now. The supply game on quantity in Ola’s view beyond a point does not build anything of value.”
via Economic Times