Is it stupid to end surge pricing by Ola and Uber in India?

The business models of major online taxi aggregators may be headed for a test in India.

 On April 6, the southern Indian state of Karnataka announced a ban on surge pricing—the practice of raising fares when demand for taxis is higher than supply. The new law said that online cab-hailing services such as Ola and Uber cannot charge more than Rs19.50 per kilometer for an air-conditioned taxi and Rs14.50 for a non air-conditioned one in the state.

“Who knows how these companies are arriving at surge pricing? They need to tell the government clearly about the mechanics behind how surge pricing is calculated on their platforms,” said Sanchit Vir Gogia, chief analyst at research and advisory firm, Greyhound Research. “How do we know if their practices are fair and true?”

The Karnataka government’s decision, Gogia added, will help “establish a strong foundation for ride-hailing businesses in the long run.”

Source: Quartz

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