Karnataka government holds talks with aggregators, favours convenience fee cap at 10%, rejects flexi fare

As an interim arrangement, the Court had, on October 14, capped the convenience fee at 10% of fares, exclusive of GST. In view of the positive feedback from auto rickshaw users, the government is planning to seek ratification of the same from the high court.

Karnataka Transport Department secretary NV Prasad held a meeting with executives from ride hailing apps including Uber and Ola in Bengaluru on Saturday morning. Both sides, however, did not arrive at a consensus as the aggregators pressed for a 25% convenience fee, including GST, on the total auto fare.

The transport department officials, however, found it too steep, and favoured continuation of the existing arrangement, sources briefed on the meeting told ET.

The executives representing aggregators also sought a flexi-fare – surge pricing in other words – but the government officials did not support the idea, the sources added.

The app-based aggregators and the Transport department had been at loggerheads after the
department asked Uber and Ola not to offer auto rides on their platforms insisting that they had been licensed to offer only four-wheeled cab services. The order was triggered by media reports and consumer complaints that ride hailing apps were charging minimum fares up to Rs 100, while the state had capped the base fare at Rs 30.

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The aggregators had moved the high court challenging the October 6 order. Justice MG Shukure Kamal, on October 14, after hearing both the government and aggregators, issued an interim direction, capping the convenience fee at 10%.

The court’s interim order came after the petitioners, Uber and Ola, submitted to the court that the aggregator guidelines issued by the Road Transport Ministry in November 2020 covered auto rickshaws as well. The guidelines were issued pursuant to an amendment to the Motor Vehicles Act, 1988, the previous year. To be sure, the Transport department has all along maintained that the licences issued to petitioners under Karnataka On-Demand Transportation Technology Aggregators Rules, 2016, limited their scope of operation to only motor-cab rides.

While welcoming the court’s interim verdict, Uber had argued against any potential cap on the commission or convenience fee when the government comes up with its new pricing policy.

Probably sensing that the government might want to make the ad hoc arrangement into a permanent one, an executive at Uber had told ET that the 10% cap on commission, if made permanent, would threaten the viability of their operations.

Lately, ride-hailing companies Ola, Uber and Rapido charged a convenience fee of as much as Rs 47 after tax on top of a Rs 60 base fare, which led to customers paying above Rs 100 even for short one-kilometre rides. The companies reduced the base to Rs 30 soon after getting the notice, and later
reduced the convenience fee as well, ET reported on October 12.

The convenience fee, which goes to the aggregators, has largely remained fixed and has not been a function of distance covered. This fee has been at the heart of contention between the government and the ride-hailing companies.

The court has also directed the Transport department not to take any coercive action on the app-based firms till the petitions were disposed of. The Court told the companies to apply for renewal or fresh licenses, as may be the case, under the regulations and asked the transport department to consider it in accordance with the law.