In Bangalore, rickshaw fares have been going up, while cab fares have been going down in the past few years. Currently, it costs Rs.13 per KM for a rickshaw[1] and it costs exactly the same, Rs.13 per KM, for a small cab[2] during the day in Bangalore. During the night, rickshaw is 50% more expensive than using a cab.
A cab is clearly a more comfortable ride than a rickshaw. I don't see how the rickshaw business will continue to operate and grow under these conditions.
My father is a cab driver and your Math is way off course. In order to break even, Cab drivers and most travel agencies offering cab services use a mix of fare systems. If you are hiring a cab for a day, the cab fares are mixture of 'time' and 'distance'. For example, there is a minimum half day charge for 4 hours or 40 kilometer, or multiples of that plus any additional billing for extra kilometers driven.
Tourist cabs are charged separately.
Autos are far far cheaper than any cab you can hire. But the margin of profit in Autos is way less, so the general quality suffers.
The reason your Meru's, Ola's or even Uber can offer cabs for so cheap is they raise enough money to operate on losses. Bankruptcy is pretty common in this business. Every time I talk to my father about a new cheap travel scheme, he only asks me to wait for their imminent demise.
We've been in this business for quite some while to understand how this stuff works. If you wish to understand how sustainable cab business work, have a talk with the office cab drivers. You will get a peek into the life of people who sleep for barely 5 hrs/day and drive 300Km/day to make a living on 12000 rupees a month. All while charging a good deal to travel agencies.
Autos are going to make a killing. If you are thinking you are going to invest your way in to this market, then you are going to be in for a surprise.
There is a saying in my native tongue(urdu): "If you wish to destroy a person's life, get him to start a travel business'.
The Math is correct. Those are the current prices. You are saying that Olacab like companies are able to afford to have low prices because they have investor money to operate at a loss. That may be true too. Yes, it will be interesting to see who can hold on for longer.
We have a reached a stage where rickshaws and cabs are competing for the same market segment, within the city.
I have seen at least 3-4 cycles of travel companies going bankrupt in as little as the last decade. The general attitude is that they think once they acquire monopoly by offering cheaper fares, then they can charge what ever they feel like.
But the story always is every time they get close to even say 5-10% of the market share some launches a competing service. By then you have lost too much money to make any thing meaningful out of it.
>>We have a reached a stage where rickshaws and cabs are competing for the same market segment, within the city.
If money isn't a concern for you, then that is true. But for anything less than 40 km of travel or a 4 hour hire, Autos will win by a big margin.
I've noticed a few things that seem to differentiate autos and taxis. Perhaps I'm overestimating their importance, and these are definitely just anecdotes and not data, but these might be worth considering:
- Relationships. Almost everyone I know who has stayed in one city/area for more than 4-5 years has the phone numbers of a few auto drivers they trust. These are the first who are likely to get a call when they have time and need to make a quick trip to a friends house or the grocery store. OTOH, while The same goes for cabs, they tend to have the numbers of a local cab company, not the driver. The cab company gets a call only for longer trips; typically the ones that lead out of town.
- Trust. Ties in with above, people are wary of unknown auto/cab drivers. I know a lot of people >40 tend to prefer calling someone they know rather than flagging down an unknown auto/cab, more so late at night.
- Roads and weather. I know a few places where driving in a car is almost impossible. The roads are just too narrow to allow it. Perhaps not a large market for cabs but one heavily trafficked by autos.
- Regional culture variations. Bangaloreans in my circles tend to prefer autos, while Mumbaikars prefer cabs. Delhi folks almost always prefer to drive.
My point being I'd love to see companies like this adapt to these variations. I'd personally prefer to call an auto guy I know who works with this service, and then fall back to someone else if he's busy. Or bump me to a cab company if the distance is too far. Perhaps give my family a way to track me on pickup and drop if I'm heading in to the shadier parts of town.
almost, but the driver mentality is different, due to difference in traffic structures. The Tuk Tuk is on the peppy side of things. The Autorickshaw[different from just 'Rickshaw'] is more enclosed, personal ride most of the time.
Great to see successful products that aren't solely smartphone based.
Minor question, can someone please explain to me what his long pinky finger nail indicates? The only thing I have ever heard is that a long pinky nail indicates someone who cuts cocaine, and hopefully I am missing something.
Unless this service grows the auto rickshaw market (meaning, someone who wasn't likely to use an auto rickshaw is now using one, thanks to this service), then this person's gain is another rickshaw driver's loss. This seems unfair to me.
Rickshaw drivers are typically uneducated and it's plausible that some of them don't realize this Uber-like service exists and are losing money because of it. Anyway, my point is, I really, really hope this is growing the market otherwise we are just taking money away from one driver and handing it to another (in theory).
"Olacabs": Cabs service in India, also faced similar deterioration of service after rapid expansion. Makes me wonder if startup-growth issue or public-transport culture problem.
Because in my experience the heavily politicized transport trade unions in india, do cause lot of trouble for initiatives like these.
A difference here is that rickshaws tend to be independently operated, somewhat differently from the incumbent taxi services worldwide that have dispatch agencies, who are directly hurt by Uber-likes routing traffic directly to the drivers rather than through the agencies.
Here, originally the only operands were customer and driver, and now Autowale, while increasing the number of operations happening, making pretty much everyone happier. Of course, there are a few rickshaw agencies, or bigwigs with subordinate drivers, who play the role of the taxi agency, and probably get angered by this, but I don't think they're unified/large enough to pose a notable threat.
So I would foresee startup-growth/business-model issues being the more relevant causes for a shutdown of Autowale, contrary to with car/taxi startups.
Shanky, not the kind of experience you'd have known Ola for. There could have been some cases of a few inconsistent experience coming your way (surely a function of scale), but that is minimized to a very large extent with aggressive sourcing of feedback, audits and quality checks. As such, Ola doesn't face such issues since it's focus is towards creating micro-entrepreneurship opportunities for drivers (who own their cars) and work with Ola purely on a commission basis, but in adherence to strict quality measures.
On a side note. if you have had a bad experience(s), do share up your CRN on feedback@olacabs.com. The team is generally quick to resolve.
That's just one thing. Operating a fleet of vehicles comes with its own head aches. Start with deprecating assets, poorly maintained vehicles, and thin profit margins. Doing this on scale gets very difficult.
Plus from everything I've heard. Getting parking slots, permission, permits etc requires paying out heavy bribes[Which you can't legally account for] etc etc.
Together all of this really makes it difficult to run this business on scale.
I was in Mumbai a few years ago to give a workshop. The fares to get too and from my hotel would vary greatly and some of the participants strongly suggested that I use tabcab (http://www.tabcab.in/index.html). It was a bit pricier, but very reliable. I wonder how this service compares...In some US cities like Denver, I've tried Taxi Magic, which has been hit or miss.
I can't wait for the launch of the service in Bangalore. You can usually get ricks anywhere you want during the day, but it's harder to get long-distance rides from North Bangalore to South Bangalore in the late evenings. I think these services can connect passengers up with auto-drivers returning to their homes in the evening across the city and solve an interesting matching problem.
I really like this idea. It will be reallu useful for strangers (as I was as an intern last summer) as autorickshaws tend to refuse to put the meter so they can make you pay more.
I met Mukesh Jha, one of the founders, couple of months back in a conference. It was amazing listening to his story of Autowale.in. His passion about this was apparent.
A cab is clearly a more comfortable ride than a rickshaw. I don't see how the rickshaw business will continue to operate and grow under these conditions.
Cab services have been growing steadily though.
[1] - http://www.taxiautofare.com/taxi-fare-card/Bengaluru-Auto-fa...
[2] - http://www.olacabs.com/fares/bangalore