More on Ride sharing business since they are legal now

By – Nabin Kafle

It’s a victory finally for ride hailing businesses in Nepal as Bagmati province has decided to make these companies legal within its jurisdiction. After years of hurdles from both the government and the private traditional taxi operators, ride hailing businesses like Pathao, inDriver, Tootle,etc. have achieved their breathing space in Nepali market. Increasing positive public sentiments and ill managed public transport forced former Prime Minister K.P. Oli to take executive decision to let the ride hailing business run. It’s a win for the companies as well as people annoyed with the failing public transport system in Kathmandu valley. 

With all things in the right place for the business to operate, we should now shift our attention towards the services they provide and most importantly the issues brought up by the passengers and riders using these services on a regular basis. The riders using the platforms of Pathao mostly complain of the hefty commission it takes away at their expense. The passengers complain of the price surge created by these platforms during the peak hours of demand. The fare sometimes seems to be higher compared to the regular rides, especially during rainy days, peak rush hours and on days with specific events (concerts, sports matches and so on). There is another popular issue of arguments between the rider and passengers regarding the cancellation of the ride. These companies previously used to charge a certain percentage of the ride fare that was cancelled by the passenger and carry it over to the next ride fare they booked. It is some kind of cancellation penalty on behalf of these platforms which need to be addressed seriously. The new riders are unaware of the promo codes and its concept and it sometimes leads to conflict between the riders and passengers. 

There are two alternatives for ride hailing business in Nepal, either to follow the western model or the one in the Indian subcontinent. Countries in South Asian regions have addressed the above mentioned issues differently. Bangladesh has supported Pathao from the beginning making it legal and generated revenue from it by levying 5% VAT on their business. Various Indian states have come up with their versions of Motor Vehicle Aggregator Guidelines which say that the two ridesharing giants can charge up to 20 per cent commission on rides, with the remaining 80 per cent of the fare going to the driver. Operators must also ensure that drivers do not drive on their, or another operator’s app for more than 12 hours in one day – a mandatory rest period of ten hours has been imposed by the Ministry for any sessions that exceed 12 hours. The new guidelines state that the maximum surge price can be 1.5 times the original fare.  The maximum penalty for a cancelled ride has been set at 10 percent of the fare, with a cap of 100 rupees. This applies to both cancellations from drivers as well as riders. It also states that drivers must have a clean criminal record and be of “good moral character”.

Bagmati Province in Nepal has paved a way for the ride ailing platforms to get registered at the transport department and made these companies mandatory to register by the end of Chaitra 2079. It seems a good beginning for the legitimacy of these platforms but major issues of commissions paid by the riders to the platforms, price surge and ride cancellation charges still need to be handled with free market mechanisms as well as some government interventions. The government should stand firm in matters of background security checks of the drivers. The issue of commission agreement between the riders and the ride hailing companies should be left for the market players. It should solely be driven by the market factors of supply and demand of riders/drivers in the market. The issue of ride cancellation charges will automatically dry up once competition begins in the market. It is clear as of present that growth of inDriver in nepali ride hailing business has made Pathao retract its ride cancellation charges for both the customers and riders. 

The concept of price surge mechanism of ride hailing companies depends upon the events of larger demands. Price surge is still legal in the western world whereas in India it is regulated to 1.5 times the normal fare. These companies have long been in the western and Indian markets and have a large number of customers and drivers to react to the prevailing market. The ride hailing business in Nepal is still in its nascent phase and still evolving. It should be left for the growth of the market to handle the matter of price surge. To conclude, Ride hailing business in Nepal should be promoted and less regulated besides the matters of taxes and safety of both the consumers and riders.