Cab Aggregators Should Make Surge Pricing Transparent, Says CCI

68% of drivers perceive a difference in the surge charged to the riders and that offered to the driver, according to a CCI study.

<div class="paragraphs"><p>Photo by <a href=";utm_medium=referral&amp;utm_content=creditCopyText">Akbar Ansari</a> on <a href=";utm_medium=referral&amp;utm_content=creditCopyText">Unsplash</a></p></div>
Photo by Akbar Ansari on Unsplash

The incentive structure provided by surge pricing is not transparent and there is, at times, suspicion on the part of the cab driver regarding the proportion of commission, the Competition Commission of India has said in its market study.

68% drivers perceive that there is a difference in the surge charged to the riders and that offered to the driver, indicating information asymmetries between cab aggregators, drivers and riders, as regards the surge multiplier/component.
CCI Market Study

The study broadly examined three key issues related to the cab aggregator industry:

  • Whether personalised pricing in the cab industry exists and, if so, does it necessitate regulatory intervention?

  • What are consumers’/riders’ perceptions about surge pricing?

  • Are there concerns related to transparency regarding their pricing structure and fare calculation?

The regulator found that there's a need for higher transparency to enable drivers with information about the various heads forming the basis of fare calculation.

Additionally, cab aggregators have been advised to give a clear and transparent cancellation policy, including details on how cancellation charges are split between drivers and the aggregator.

The study also examined the issue of surge pricing and concluded that it is not necessarily counterproductive. The concept encourages drivers to increase supply of their services and riders do not necessarily perceive surge as a deterrent to book a ride, the regulator said.

However, the study recommended that there is a need for greater transparency on the quantum of surge as well as sharing of such surge amounts between the aggregators and drivers.

The surge charged for each ride should be reflected in the invoice, the CCI has pointed out.

The regulator has also urged the industry to adopt self-regulatory measures to inculcate best practices for ensuring a well-functioning ecosystem.