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Uber forced to suspend surge pricing in Delhi

Uber forced to suspend surge pricing in Delhi


Chief minister describes automated pricing as 'daylight robbery' and suggests that it will be permanently banned

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The government of Delhi has cracked down on surge pricing from Uber and local ride-hailing company Ola, forcing the startups to suspend the feature across the Indian city of nearly 10 million people. In a series of tweets posted this week, Delhi Chief Minister Arvind Kejriwal sharply criticized surge pricing, which uses algorithms to raise fares when demand for taxis is high. Kejriwal described the practice as "highway robbery," and said that "strict action" would be taken against drivers who raise their fares. He also accused the companies of taking advantage of a temporary restriction on the number of vehicles allowed on Delhi's roads — a pilot program aimed at reducing air pollution — and said those who engage in surge pricing could have their cars impounded or their permits revoked.

In response, both Uber and Ola issued statements this week saying they would suspend surge pricing through the end of the pilot program, which ends on April 30th. Uber has long maintained that the feature encourages more drivers to pick up customers when demand is high, though its feature has come under criticism — most notably, after it was activated during Hurricane Sandy and a shooting in Sydney, Australia. The company has since worked to implement price caps during emergencies.

Gopal Rai, Delhi's transport minister, tells The Wall Street Journal that 43 taxis were impounded on Monday for surge pricing, and Kerjiwal, in a tweet, said that the ban would be made permanent. In India, both Uber and Ola use fleets of taxi drivers, rather than private contractors with their own cars, which makes them subject to stricter regulations.

"We are not against taxi aggregators. We fully support them. They provide [important] service to people. But they will have to follow law," he tweeted. "Overcharging, diesel cars, drivers without licenses/badges and blackmailing by taxi aggregators won’t be [allowed]." Uber tells The Financial Times that it has not received any notification of a permanent ban on surge pricing, and did not provide further comment.