Ola Woes Unlikely To Ease Soon As Fuel Prices, Dwindling Driver Pool Hurt

Cancellations, increasing waiting period, extra charges for air conditioning and more--Ola's convenience frequently turns into a hassle for users now.

It is no longer lucrative to drive an Ola cab given the narrowing margins due to a rise in fuel costs, according to drivers and their associations. In the past three months, CNG, the most widely used fuel for taxis, has surged 30-40%, taking away a large chunk of the drivers’ earnings. According to All India Sarthi and Owner Association and Sarvodaya Drivers Welfare Association, fares have been raised by just 5-10%.

Add to that an average of 35% commission on every trip charged by Ola and Uber, leaving very little for the driver, Ravi Rathore, president of Sarvodaya association told BQ Prime.

That's also forcing drivers to resorting to moves that hurt Ola's revenue. They ask passengers to cancel the ride on the app and instead pay directly. If passengers refuse to oblige, they are left with no option but to wait and look for another cab.

"While companies like Ola and Uber have the might and means of a big organisation, the drivers have bills to pay and they resort to such moves even at the risk of losing their access to the platform," Rathore said.

Ola's pool of drivers is shrinking as those who left for their homes during the pandemic have not returned, according to industry associations. The pace of new drivers joining the workforce has slowed down too.

On its part, Ola's incentives to drivers for making a fixed number of trips in a day have either been discontinued or reduced to paltry sums.

The company has reduced the incentive on every 22 trips to Rs 200 rupees from Rs 800 earlier, Bhuwan Chand, an autorickshaw with Ola, told.

Chand showed the 154 ride requests he got in a day, of which he cancelled 130 as it's impossible to accept so many rides. Incentives, he said, are also not encouraging enough.

Rathore said many drivers have complained that the company is way off in estimating fares before the trip compared with rival Uber, leading to frequent fights with passengers.

The financial constraints have made it impossible for drivers to operate in the taxi business without owning a vehicle, said Sumer Ambawata, president of Taxi Union NCR and member of All India Sarthi and Owner Association. The limited income has also broken the lease structure under which drivers were earlier able to pay weekly instalments, over and above the trip commissions, to ultimately own the cars given by the companies, he said.

ANI Technologies Pvt., the parent of Ola, reported a consolidated income of Rs 1,168.2 crore for the year ended March 2021, according to data sourced from the Ministry of Corporate Affairs. However, it posted a loss of Rs 1,104.70 crore during the period. That compares with Rs 2,844.1 crore in total income and loss of Rs 2,208.2 crore in fiscal 2020. It reported an Ebitda loss of Rs 485.8 crore in FY21.

The fall is primarily on account of Covid-19 pandemic lockdown. The group had an accumulated loss of Rs 17,452.6 crore at the end of fiscal 2021. Financials for fiscal 2022 were not available.

The company has shut down its quick-commerce business Ola Dash and reoriented used car selling business Ola Cars to augment Ola Electric’s sales and service network. Reports suggest that Ola is also laying off of employees.

Ola didn’t comment BQ Prime's queries on laying off employees and complaints of cancellations and driver complaints. However, they shared their June statement.

The ride-hailing business is delivering higher-than-ever gross merchandise value month-on-month along with strong profitability, the statement said. In Ola’s case, the GMV will be the cumulative fare generated through all the trips in a set period.