Afcacia

Ride-hailing firms Little and Uber are reading from different scripts over proposed cap on driver commissions.

Little is supporting a plan to cap the commission at 18 percent, noting that this will enable the company to compete on equal terms with its rivals such as Uber and Bolt.
Uber moved to court to fight the proposal, saying the plan would make it hard to do business in the country.

The National Transport and Safety Authority (NTSA) in June published regulations capping the commission—to take effect on September 18—in a bid to shield drivers who have been hit by declining earnings.

Little chief executive Kamal Budhabhatti said putting a lead on the commissions would tame the recurrent fare cuts and discounts offered by its rivals.

The firm has blamed the price competition for its failure to expand, unlike in the corporate segment where it is the market leader.

“We support the commission and what the government is trying to do,” Mr Budhabhatti noted.

The higher commission, he added, is what the competitors use to “keep prices down and eventually putting down the expenses on to drivers”.

Uber currently charges a 25 percent commission per ride, which it says covers promotional price cuts to attract riders, operating costs, health insurance on the trip for the driver and the passenger, and support of safety button technology that passengers or drivers can press if their safety is in jeopardy.
Bolt and Little charge 20 percent and 15 percent respectively.
Uber, in its High Court application, said the cap could stifle innovation and reduce the ability of the company to invest further in the economy.
“Service fees/commission regulation, which is equivalent to price regulations would be undesirable because there are no product features or market failures that would warrant capping of the service fees,” Uber said in its application.

Uber is asking the court to declare the regulations unconstitutional, saying they will restrict flexibility of its revenue model, and stifle ability to negotiate suitable commissions which will affect its investment, demand and competition.
Bolt is yet to reveal its plan on whether it will join Uber in opposing the new regulation, or comply with the 18 percent cap without protest.
Digital taxis’ drivers across the industry have in the past protested about high charges by the apps eating to their earnings which have also declined due to a jump in the number of drivers and players in the industry.
The crisis worsened from 2020 on reduced demand after the work-from-home measures put in place to fight Covid-19, reduced expenditure by individuals who lost jobs during the pandemic and high cost of fuel.