The scenario is now very old. You get a confirmed booking for a cab on your ride-hailing app. You get a call from the driver asking you about your drop details. Very innocuous sounding fellow, he notes down your details and says be right there in a few minutes. Next thing you know, they have cancelled your ride.
Several years ago when the same “bhada (ride) refusal” was reported, auto rickshaw drivers in Bombay were fined by the traffic police. Uber has started to penalise their drivers for poor quality standards off late but yet the problem persists.
Why do the cab drivers cancel the ride after accepting it in the first place? I (annoyingly) pose this question to almost every cab ride I take. Many of them have a very interesting take on the matter. Here are some of my inferences:
Gig Employment: The very nature of the employer-worker relationship is that of dynamic control. The app decides the next ride, determines how much the driver will earn and does not reveal (in most cases) where the driver will be headed to after he picks up the rider. This causes high uncertainty and leaves the driver no choice but to game the system by accepting the ride, acquiring all the information and then making a decision. This is in the strictest sense is a grey area in the gig employment space where service delivery standards are not as strict as in say a, a restaurant.
Commissions: Last week Uber India increased the base fare by 15 % to factor in the rise in fuel prices. However, the commissions which it charges drivers remained the same, approximately 30 % per trip. This is the reason why many drivers try to strike a deal with you especially for longer rides. The standard fare agreed by almost all Uber drivers for Bangalore Airport from the city is about ₹1000 with toll extra, otherwise they take the non-toll route which could be a safety risk especially during odd hours. The longer rides work out to be cheaper for the consumer but not so lucrative for the drivers.
Lack of Understanding of Technology: The driver dashboard and its various functionalities aim to offer the driver a realtime view of their earnings and trends over the past few months. Many of the drivers who have taken up driving in the event of other job losses are unable to navigate through the app. The various “target” based incentives create a nudge effect for not cancelling rides but they often go unnoticed. Many drivers struggle to understand the online payment systems and insist on cash payments. A weekly payout further adds to their lack of trust. This holds true for many first time drivers.
Asymmetry of Knowledge: The foremost problem that cab aggregators tried to solve was the asymmetry of knowledge when it comes to demand and supply. By putting the suppliers and the consumers on the same platform they aim to create a win-win situation. But the balance is disrupted when one exceeds the other. In lean periods drivers are unsure when the next ride may arrive and during busy hours they don’t know what the trade offs are.
This stems from the fact that they don’t know their potential earning income per ride. This causes extreme uncertainty and leads them to determine their outcomes by calling and finding out the location. This kind of decision fatigue clouds their judgement and they make split second decisions.
Way Forward
Uber has been one of the more revolutionary innovations of the 21st century. It has impacted our lives and made ride-hailing a lucrative business. Many of the drivers did confess that in spite of the tussle over commissions, they value the respect and independence that only self employment provides. In the social hierarchy a driver’s job is hardly aspirational but Uber drivers are a different breed. They are entrepreneurs with their own assets. The gamified platform once understood can server as an important mechanism to improve one’s earning creating a viable risk-reward framework.
So, what is the way further? I can think of three key things.
- Allow penalty free Cancellations: Ride refusal and cancellations for upto 10-15 % of the total rides of the day. There are many genuine reasons why drivers cancel the trips and that level of independence must be allowed.
- Variable Commissions: While maintaining a cap on the overall commission rate, ride-hailing platforms could instead offer a variable model with lower commissions for every Nth trip or vary it as per distance. Additionally, it could lower commissions when surge rates apply. It could even reward drivers for maintaining a streak of no-cancellation rides. Instead of levying a penalty, it could adopt rewards for compliant behaviour.
- Lower information asymmetry: The app could allow drivers to set daily income targets and help tell them how close every next ride would take them to their daily targets. It could also help them to provide a more intuitive model which predicts approximately how long would it take for the next ride. I have tried to put together a simple prototype as below:
But the most amazing thing would be an open source application such as Signal but for Cabs. Maybe there is a scope to build an MVP for the local Kaali-Peelis for a minor fee? Any takers?
Also, while we are it – how about better public transport? I miss the BEST and Autos of Bombay in Bangalore.