While nobody likes paying higher prices, surge pricing is actually a good thing for both passengers and drivers.
Reasons to Love Surge Pricing
1. Surge pricing gets more drivers on the road
It might seem an evident point, but it is often overlooked by people who rant about surge pricing. Surge pricing gives drivers a reason to spend more time on the road than they otherwise would. It encourages them to re-arrange their schedules to make sure they are available during the peak hours.
2. Surge pricing gets passengers to use rides more efficiently
Usually, during busy hours, people face problems like non-availability of cabs. Surge pricing addresses this problem by setting prices high enough to bring supply and demand in balance, ensuring that you can always get a ride if you’re willing to pay enough. To some extent, this means that richer people get rides and poorer people don’t. But that’s not the sole factor affecting people’s willingness to pay. If some people have other options to get home i.e walk, bus ride, while the others only option is by taxi. Surge pricing will cause people who can get home some other way to do so, reserving the taxi rides for people who don’t have alternatives. Surge pricing also encourages carpooling to some extent.
3. Surge pricing redistributes wealth from rich to poor
When Uber and Ola raise their fares, at least 80 percent of the extra money goes to the driver. And more likely than not, the driver needs the money more than the passenger does.
4. Surge pricing ensures rides are available in emergencies
Surge pricing guarantees that a ride will always be available to people who really need one. In the conventional flat-fee model of the taxi industry, someone who happens to need a ride during a period when drivers are scarce might just be out of luck. No matter how badly you might need a ride, you have to get in line with everyone else. Inconsistent pricing practically ensures this will never happen. You might have to pay extra, but you can always get a ride if you really need one.
5. No one is forced to pay surge prices
In the days before Uber and Ola, if someone wanted to go home he had two options; either they could walk or take transit home, or they could wait for the taxi to show up. Uber and Ola provide you with a third option that didn’t exist before. If you’re willing to pay extra, you can get a ride home more quickly. It’s just that- an option. No one is forcing you to take it.
There are some steps you can take to avoid the surge.
- For starters, perhaps you can avoid Uber and Ola and use Ola-owned Taxi for Sure, which doesn't have surge pricing.
- Surge pricing isn't in effect all the time. Many commuters have told IndiaToday.in, that they resort to waiting it out when surge price is enabled. If you can do that you should wait it out. For example, if you leave office at 6.30 in evening you will probably encounter surge price. But if you leave at 5 or 8, maybe you won't or maybe the surge quantum will be lesser.
- If you see surge pricing in effect, perhaps you can walk a block or two away. Often there are spots where there are lots of people gathering and hailing cabs. If you can get slightly away from the rush, there are possibilities that you may avoid surge. There has been a study that claims this is an effective method.
In Delhi, the Govt. prescribed taxi rates are Rs. 12.50 per km for Economy Radio Taxis, Rs. 14 per km and Rs 16.00 per km for non-AC and AC yellow taxis respectively. But it’s not just the taxis who adjust their prices according to the demand. Dynamic pricing is commonplace. We’ve seen them while travelling using private airlines, and even with the Indian Railways. But the ‘need to incentivise the service provider’ angle needs further clarification.
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