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Banning Surge Pricing Doesn't Change Anything For Uber or Ola Drivers


Our last set of articles on Uber and Ola got some serious attention – the Economics of Using Uber in India and the Counter Arguments.

Since then things have seen sudden changes:

  • Uber and Ola have seen regulation hit them – with Karnataka banning surge pricing, and mandating fees on cabs and sharing services alike.
  • Plus, while they can enlist cabs, they can’t own the vehicles, or prevent drivers from migrating to other services.
  • Karnataka has started to seize cars that have surge charges
  • Delhi has managed to arm twist Uber and Ola into removing surge charges while the Odd-Even scheme is going on

Uber gets Regulated

The Surge Deal: It Doesn’t Really Work in India To Bring Out More Cars

The idea of Surge pricing was that if there aren’t enough cars on the road, increasing prices will attract drivers.

It doesn’t work like that in India. The rest of this section is pieced together from Uber drivers I’ve had good conversations with over the last few months.

In India both Uber and Ola “guarantee” certain incentives for drivers. Do 15 rides, we pay you Rs. 3000 extra as an incentive. Do 20 rides and you get Rs. 5000 etc. (The numbers change every week)

The billing is complex – you pay your Rs. 100 per ride (approximately). The driver does 15 such rides and bills Rs. 1500. And he gets another Rs. 3000 as an additional guaranteed incentive. That would add up to Rs. 4500. Then Uber takes 25%. Which reduces what the driver gets, to Rs. 3375. And so on.

Notice that Uber has paid Rs. 3000 extra beyond what you’ve paid, but taken back 25% of the total, which was Rs. 1125. So they net paid our Rs. 1775, in this example, from their pocket. Why would Uber lose money on every single day? Because they can.

So when there’s a surge, let’s say at 2.2x, the driver gets Rs. 220. Let’s assume he gets this surge for all his 15 rides. Now he’s rich! Not really. This sounds great, but apparently, Uber and Ola rough up the calculations here. The extra Rs. 120 isn’t something that’s directly paid out to the driver – it’s considered part of the Rs. 3000 “incentive”. So the driver still gets paid Rs. 100 (the non-surge fare) x 15 rides = 1500. Then he gets the surge = Rs. 120 x 15 = Rs. 1800. But since he gets the surge, the incentive of Rs. 3000 is brought down to Rs. 1200 instead.

And the net calculation still works out for him to be the exact same – Rs. 3375 for the day. The only person that benefits is Uber – it tends to lose less when it applies Surge pricing than otherwise. (It still doesn’t make money but that’s not a bad thing nowadays)

The driver gets no benefit of the surge (but he would if the surge actually goes beyond the guarantee – though that’s a far cry). So to a driver, surge or no surge, he gets the amount he’s guaranteed, so he’s fine. 

Therefore drivers don’t actually like to be in an area where there is a surge.  Because people hate to book cabs in surge times, and drivers don’t get anything extra, but they have to keep waiting! And they risk the loss of the 15 ride minimum they have to make every day. But Uber’s algorithm creates surge pricing in almost every single area at the same time – so drivers just stay put if they can’t find a no-surge area nearby. 

So Surge Pricing doesn’t really bring out drivers – and this is also why you might find yourself with a number of Uber cars around you, parked and empty, and yet, you see that 3.6x surge that refuses to go down. 

Note: This concept has changed over time and is probably going to change further but this is how I understand the billing based on conversations I’ve had.

Update: Uber  Delhi has stated on twitter that Uber maintains incentives separately from surge. I’m not sure how to read the rest of the tweet where incentive structures are different – and my conversations with drivers recently has me convinced that they believe surge doesn’t come to them at all.

Other people have said Ola doesn’t pass the surge on, but Uber does. Yet others have said Delhi drivers have confirmed they get the surge separate from the incentive, but people in Bangalore have tweeted that Bangalore drivers don’t make the surge. So it could vary from city to city, or from provider to provider. (Note: I only have feedback from multiple drivers, so take all opinions as such)

Cutting Surge Will Hurt Ola and Uber

As we’ve noticed, removing surge pricing only hurts the cab aggregators. Not the drivers. Because the drivers get their payout no matter what.

Surge is also crazily heavy. Even at Rs. 7 per km, the total cost is Rs. 15 per kilometer, nearly. Because beyond Rs. 7 per km, they charge you Rs. 1 per minute – and in city traffic, it’s a kilometer every five minutes = Rs. 5 per kilometer extra. That’s now Rs. 12.

And then you have a minimum of Rs. 35 or so. The meter starts at Rs. 35. For a ride of 10 kilometers that’s Rs. 3.5 per kilometer. Add this too, and you get a price of Rs. 15.5 per kilometer.

It’s not Rs. 7 per kilometer. It’s Rs. 15.5 for a 10 kilometer ride. Even more for a shorter ride.

The maximum you can charge in Karnataka is about Rs. 25 per km (at night) and about Rs. 20 per km in the day. A “Surge” price of even 1.5x takes the total cost up higher than the maximum!

This is probably why the Karnataka Govt has stopped this. In general, if people are angry that the government is trying to dictate prices, please remember that public service prices are usually regulated to an upper limit, and even Airlines have been stopped from charging over certain approved fares. Mutual fund commissions are regulated. The amount a broker can charge is regulated (upper limit). The idea here is that when you have a large population that potentially depends on you, the way for the regulator to build trust is to create frameworks where one doesn’t feel cheated – otherwise as a public they will cry for larger regulation, and in India, they will get it. While this may not be great for a person who thinks a sucker and his money should be parted, or that the buyer beware philosophy must prevail, the larger fact is that such situations create a massive trust deficit because you know that people cheat you all the time.

Sure the alternatives are not much better – like autos, who won’t even come in the direction you want to go. And you still have the ability to take a Meru or a full service cab. But then, since there are upper limits on those fares, there should be upper limits on the Uber/Ola fares too – just level the playing field a little more.

Fixing it:
Charge the Maximum, But Offer Discounts Through The Day

Uber can still charge you a surge – just not as high as they currently offer. They can offer you the ride at Rs. 25 per kilometer and at “good” times, offer a discount of 50%, taking your cost down to Rs. 12.5 per kilometer. As the demand goes up, the discounts can come down.

It’s still a surge, but the government will like it better.

Oh, and for the math, Uber and Ola will still lose money, but hey, that’s fashionable nowadays. They might make the profit grade if they hit extreme scale and are able to cut driver incentives. This is a tough ask, but like Ravi Shastri says, the game is on and all three results are possible. 

Disclosure: I Still Use Uber/Ola, But A Lot Lesser

At a personal level, I’ve started to use my car much more – I was almost completely on Uber. Because:

  • Uber isn’t available when you want it fast – and typically takes 15 minutes to turn around, what with the driver asking you for instructions, missing turns and what not.
  • And then there’s the surge, which just pisses me off especially when I see empty Uber cars around.
  • And my car is turning out to be half the expense of Uber, because it’s fully paid for (no interest costs), I don’t have to pay for parking, and it’s right there when I want it. 

Uber and Ola are useful to drive into the city where parking is a pain, for trips after a pub visit or when I need to have relatives travel (where I can book and pay). So for that I would love to see these companies continue to make things available for me, and I would happily take other public transport as well.  

Please take a minute and answer the poll – Share your opinion with us. You can choose more than one option from below.

[poll id=”2″]

Related Links:

Counter Arguments On Uber Economics: What About The Cost of Owning a Car, And Other Deeply Insightful Questions

Ola & Uber Raised More Money in 2014 That all the IPOs in India! We Tell You how These Companies Work

Here’s Why RBI Did Not Allow Uber to Use Single-Factor Authentication to Bill You

  • Randeep says:

    The premise of this explanation that surge doesn’t lead to more drivers since uber short changes drivers is solely based on conversations with drivers? How far is it advisable to take this as gospel truth considering that this is against uber’s general policy and the drivers would always want the rider to feel they arent fleecing them, and the company is making the real money.

  • Shan says:

    Ola and uber will force drivers to stage protests… I disagree that drivers have nothing to lose. They will be the ultimate losers.

  • Kumar says:

    I think it’s just a ploy by politicians in Karnataka govt threatening Ola/Uber to send them some bags of money

  • ravikiran.vadlamudi says:

    I and my family completely rely on Uber & Ola.
    We do have a car and rarely take it out.
    The convenience of not having to find parking tops everything, but then again, surge and finding cabs in peak times suck. Hopefully more cabs would help bring the supply demand situation down.
    In Hyderabad, I see new “yellow plate” cars everyday, Based on my experience at work and conversations with drivers, drivers are quitting “transport companies” to start their own business. Many have come from near by villages as well.
    When the incentives do come down, I am scared if all these drivers can really afford the EMI for their cars? Bubble in making?

    • Ya Hyd is relatively new. BLR has some 100,000 cars now that seem to have either Ola or Uber. This is not yet saturation point, but it will get there. Many people i know just want to make it to the three-four year mark when the EMI will be done with!

      • Hardik S says:

        100,000? Thats a lot! Even if Uber/Ola were paying out an average incentive (Net of their fee) of INR 500 per car per day (vs the INR 1,775 assumed), they would be losing INR 5 cr a day in only BLR (Thats INR 1,825cr a year!) . Doesnt that seem too much?

        • Yeah – though 100,000 is the total number of cabs apparently – many must only do Uber or Ola exclusively (you have to, to get the incentives). So I think they are probably losing around 50 cr. a month per city, probably a little more….

      • ravikiran.vadlamudi says:

        I wanted to know more about Uber business as a driver and I did register on their site. I got some calls and told them I am no longer interested. But I do keep getting the sms reg the incentives.
        Here is the latest one for Hyderabad
        Special Incentive Scheme for you from Monday, 18th April. EARN Rs. 25/- PER KM in peak hours!!. (To qualify min. 4 peak trips per day). Non-peak hrs – earn Rs. 13/- per km on each trip. In peak hours do at least 4 trips and earn extra incentive of Rs. 12/- per km. (Total Rs. 25/- per km). Earn extra on surge trips!! Minimum Guarantees – Rs. 4000 for 11 trips (min. 8 peak trips). Peak Hours: Mon-Fri: 9am-12pm, 3pm-10pm Sat & Sun: 10am-1pm, 3pm-10pm Airport: Peak airport trips will be counted as 2 peak trips and extra on airport trips as they are longer. Your day is counted from 4Am to 4AM. Thank You Uber Hyderabad.

        • Thanks Ravi. I think this is the kind I’ve seen in BLR too. The “guaranteed minimum” includes the surge (it’s some 3 or 4K for 15 trips now). So technically if they do 11 trips, surge or no surge, they get the 4K. Out of this they need to do 8 tripes in the 10 hours of peak time (In blr that is also up to 10 trips I think).

  • Dipesh Chaturvedi says:

    This article is fundamentally incorrect.
    Uber and Ola offer BUSINESS guarantees i.e. they assure the drivers that if they do x number of trips, the company guarantees them y amount of money. If their earning is less than y, the company will top it up. So to take you example – if the guarantee is 3000 for 12 trips, if the driver does 12 trips and makes Rs.2500, the company will add on Rs.500. If the driver does business worth Rs.3300 in 12 trips, the company will not add anything. The commission is cut on the total amount.
    Keeping this in mind, it’s easy to spot the flaw in your logic. The driver gives himself a target of 12 trips daily because he knows he is definitely going to make Rs.3000 (minus commission). If he gets some surge trips, he might make Rs.3000 even before 12 trips. After that, whether he drives more or not is up to him. A lot of drivers would be happy to pack it in once they have reached the daily target they have set for themselves – it’s like leaving office at 3pm. That’s the benefit that drivers get from surge – make money faster, and go home early if they want.
    Feel free to check this the next time you are conversing with a driver.

    • No – the guaranteed incentive is on top of the ride earning, but apparently it includes surge extras. Now this may be a recent change (since earlier the surge was separate and not included in the incentive) and varies by city
      However my conversations are like this – a driver only wants to make a certian number of trips. Not a rupee amount. All they ask each other (in Kannada on the phone) is – how mmany trips are you done with? at 11 PM a guy was worried he had not reached the number for the day, and many others I’ve met have even asked me to book a dummy trip (marked as cash) for meeting that number-of-trips target, at the end of the day. Others even told me they quit after the target number is reached – one recent driver was furious at the minimum being increased to 15 a day! (He was making 12 easily by 7 pm, now he has to work till 9-10pm)

      • Dipesh Chaturvedi says:

        Drivers only want to make a certain number of trips because they want to make a certain amount of money. If they can make it in x trips, they will do x trips. If they can make it in x-5 trips, they will do x-5 trips.

        • NOpe – it’s clearly number of trips, unrelated to amount of money. All my conversations with them is only around how many trips…

        • ravikiran.vadlamudi says:

          yes But I guess what Dipesh is saying is that, if the “incentive amount” can be reached by taking up surge trips (assuming surge amount is a part of the incentive amount). Then the driver can call it quits for the day after x-5 trips since he maxed out the incentive amount for the day.
          But I am pretty sure the drivers will keep it simple and target 12 trips rather than calculating the surge amount.
          I once had a conversation with a driver in hyd who got a new car, his uncle paid the down payment for the car in a profit sharing model. So the driver and his uncle split the profits after deducting all running expenses including the EMI.
          I told him he got a very short end of the stick but he still didn’t get it. He continues to say that it’s his uncle who paid for the car and after his gig, his uncle will own the car. The loan is in the drivers name, he is paying the EMI.. anyways.

        • True – I agree with that. The problem currently is that the incentive is much higher than the surge chargeable amount – even at 2x surge you might only see Rs. 300 per trip; 11 trips of that is just 3300 and not enough to make up the incentive. And the chances are that less people take the surge, waiting instead for surge to fall (or looking at alternatives). That severely reduces their chances of getting a ride (since somehow the surge doesn’t seem to consider that enough cars are available) – and jeopardizes their number of trips goal….
          I think drivers are smart enough to gang up and switch off their mobiles so that Uber woudl hit a surge (if surge was that good for them)…

        • Dipesh Chaturvedi says:

          Pause to ask yourself why they care about the number of trips. They do because they get a certain amount of guaranteed money for completing those trips. Now if they could get that money without doing as many trips, do you think they would still care about the number of trips?
          Our conversation is continuing because while I am suggesting that the incentive is a ‘business guarantee’, you are claiming that it is a an amount paid on top of all fare. I would suggest you consider the possibility that my point might be accurate and take just one trip today and ask a driver. You might be working with old data.

        • Dipesh – my most recent trip was two days ago 🙂 But here’s the thing – they care about those number of trips because they know that the money they can earn is only possible through a large number of trips. They know also, both intuitively and by experience, that hoping that surge prices will make the numbers for them simply won’t work – for multiple reasons: one, that they don’t get riders at surge times (the number of rides goes down substantially according to nearly all people I spoke with). Second, that the calculations change often and if they think that they’ve made the grade, they might find out later that some stupid thing happened and they didn’t. The trip number is a much better metric to target – because they know that if they make it, they get the deal.
          I know a guy who meticulously documented how much each trip cost (and he would ask the passenger what fare they were shown so that it was confirmed). He told me in general there has been a 1000 rupees per day difference between what he thinks he should get and what Uber pays him – and he’s looking to lose a day fighting this out if it goes to a higher amount.
          I get your point about a business guarantee versus an “on the top” incentive. I’m just saying that because of that incentive structure itself, drivers don’t care about the surge – mostly because the behavioural isuuse I point out earlier regarding lack of proper knowledge of how much they’ve earned, and the irregularity of rides during a surge. Given this, drivers want to avoid a surge and do the trip count rather than work the surge numbers. If you’re gonna get the numbers by doing trip-counts, then why bother with surge and all that?
          You should take a trip, ask a driver – do they like surges, do they go to surge areas to take advantage and do they target trip counts rather than money. Would love to hear what you make of it…

  • Driver partner says:

    Your understanding of how the driver incentive structure works, is grossly mistaken. Surge pricing is passed onto the driver, unlike you mention and the actual calculations for the driver’s daily earnings who takes 15 rides in the day at 2.2x surge would be as follows:
    From the trip fare: Rs. 220 * 15 = Rs. 3300
    Uber’s commission: Rs. 3300 * 25% = Rs. 825
    Driver incentive on 15 trips: Rs. 3000
    Net driver’s earnings for the day: Rs. 5475/-
    (On a side note, also notice that Uber’s commission of 25% is calculated only on the fare amount and NOT the incentive)
    Key notes:
    – Does that mean that Uber is actually burning money on every ride, and there’s no surge multiple compensating for that? Yes.
    More importantly, note that the commission of 25% is earned on all rides, while the incentive is handed out only to the most consistent drivers (approximate that to the top 10%), the commission from the rest is where the money for the incentive comes from.
    – So, does surge pricing actually drive up supply to match the demand? Partly.
    Unlike the US market, most drivers on Uber platform are full-time registered cab drivers. There are no individuals Ubering for a few extra bucks. So, while surge pricing does not have the same effect as bringing more drivers onto the platform, it does help drive the available supply to the right places (where the demand is). And that’s the essence of surge pricing.
    Hope this clarifies, Deepak. 🙂
    Feel free to edit your article with these inputs.
    PS: I know all of the above with certainty because I work in this industry.

    • Thanks. I see some clarifications by Uber Delhi on their twitter account as well. My conversations with drivers was about this very concept – where earlier, at least in Uber, the surge would come to drivers – but recently they’ve been telling me things have changed on the commission front – first that Uber increased the minimum rides for the incentive from 12 to 15 and also that surge was included into the incentive.
      Unfortunately nearly all drivers I know have told me it’s simply not gonna work out for them if they don’t do the incentive limit every day – so I don’t believe the top 10% funda at all. I understand you work in the industry, but as an anonymous source I cannot hold your words to a greater truth than inputs from many drivers I’ve had the pleasure of riding with.
      If you’re in the industry then you might notice that drivers suddenly move away from surge areas if possible, especially when surge crosses 2x. In the mornings and evenings there’s a surge nearly everywhere, so they just wait. (At least in Bangalore). The surge pricing doesn’t depend on how many drivers are in the area at the time, but about how the algo determines supply and demand, according to Uber itself – therefore even drivers will know soon that their going somewhere will not reduce the surge (and therefore increase the chances that people will book a ride).
      I’m making some changes about Uber’s official clarification of course.

  • Dyslexic says:

    The regulator aka Kejri acting on whim is the agent for creating trust? Waah. When an economics blogger misses the point about competition, it’s time to throw in the towel. We deserve the shitty services we get

  • Kushendra Suryavanshi says:

    Deepak, Can you please tell me any other businesses which succeeded on the same business model: Increase customer base – Burn investor’s money – Wait for tipping point – start charging more – people still use because they are “loyal” – everybody’s happy.
    I want to know why investors believe in such a model at all?

    • Well, amazon 🙂 But they were able to charge more in different ways – from free shipping to paid, very low prices due to inventory optimization, adding Amazon prime, etc.
      I don’t know if this will work in the taxi industry but hey, someone’s gotta try!

  • M Jadhav says:

    I use Taxi4Sure for most of the time and very few trips with Ola or Ola Micro just to check their service levels. I don’t have a car and I do sometimes face issues like Car didn’t turn up when you expect them to. Used Uber just for 2 times just to check their service. I live in Pune & near IT Hub of Hinjewadi. I never paid surge pricing. Almost 20-30 trips since Aug 2015. I feel there is very bright future as Ola/Uber Driver at least in PCMC Area of Pune where Auto don’t follow the rules and demand any amount in their head looking at customer. They will definitely kill other mode of public transport if other mode’s don’t innovate or fall in line. I also chat with drivers about incentives and they definitely get based on number of trips and shorter trips helps them to achieve that target.

  • Sreekanth says:

    I do get into conversation with every cab driver that I meet. I use Uber mainly in Bangalore. Every driver told me that the Surge Price benefit is not passed to the cab drivers.

  • Anirudh says:

    Its really a sad part of this system that the Driver doesn’t get any Surge Price Benefit. I haven’t use their service but have heard it from some of my friends.

  • Mohit says:

    Deepak, I have three questions:
    1) First one is regarding your claim that surge price benefits don’t really go to the cab drivers. Now, starting 15th April, with the implementation of odd-even scheme, surge pricing in Delhi went off the roof, both for Ola and Uber, which ultimately culminated in suspension of surge pricing in Delhi. We can all agree that the introduction of odd-even scheme was an exogenous shock to the demand side which led to an increase in demand for cabs. There was no such shock to the supply of cabs, it somewhat remained the same. Maybe Uber/Ola, preempting this surge in demand, put additional structures in place to meet that demand – we don’t know. But it’s fair to say that supply of cabs could not have increased as much as the demand increased. Now if we assume that surge priced fares don’t go to cab drivers at all, what you’re essentially saying is surges as high as 5x which were seen starting April 15th, were just a profit making exercise by Ola/Uber. So you’re saying, Uber, a multinational company worth 60 billion USD who has been accused of predatory pricing and driving prices so low that it eliminates competition, used the odd-even scheme, when people in Delhi were dependent on Uber more than usual, to drive up its profits 4x -5x times? And its competitor Ola, which is constantly waging a turf war with Uber, simultaneously used this precise moment to quadruple their profits instead of lowering prices to poach Uber consumers who didn’t want to hail Uber at 4x-5x prices? AND both the market players, which have excellent PR and strategy teams, did not envisage a scenario where this sort of exorbitant pricing will result in public outrage and ultimately culminate in regulatory action banning its profit churning arm of operations – surge pricing? There must be something wrong with our assumption that surge pricing is not a mechanism for incentivising the cab drivers.
    1) Let’s say we buy your argument that the benefits of surge pricing go only to Uber and there is not incremental advantage to the cab drivers. In that case, they would be surge agnostic to the rides they pick up – they won’t care if it’s a normal ride or a surge ride, since the proceeds are not gonna go to them. Explain to me how you conclude that surge pricing will thus, deter a cab driver from taking the surge rides? Your argument is that cabs in surge areas prefer to run away from there because people don’t want to pay more for their rides. But have you thought of the possibility that the unavailability of cabs in a particular area IS the precise reason why surge pricing is triggered in the first place! Hence, there is actually no moment when there are cabs waiting in the surge areas, whiling away time till surge price goes away. Surge pricing kicks in when there are no cabs in that area to induce cab drivers from other places (which are further away) to come to that area.
    3) I still fail to see what is wrong with this incentive structure? You have possibly brought out new information to light – the veracity of your surge price claim still remains questionable. But even if this is the incentive structure in play, I fail to understand your conclusion. Uber and Ola have an incentive structure for the drivers: They get the safety of a very handsome, fixed earning a day if they complete x number of rides and no additional earnings if they take surge rides. Let’s say the surge pricing algorithm is based on supply of cabs in a 5 km radius around the consumer. If there are no cabs in the radius, the surge pricing will kick in and a cab from, let’s say, an 8km concentric circle will come to service you at 1.8x price. Instead of the driver, in that 8km radius, being incentivised by the lure of higher cab fare, he is incentivised by the lure of finishing his target for the day. Uber will pocket this profit on the ride. Now whether Uber/Ola uses that money to further increase incentives for drivers so that surge is driven even lower or whether they choose to give exorbitant perks to its employees, how is that of any concern to us? The consumer got serviced in that moment, but at a higher cost. Now he/she may value the reliability of Uber’s/Ola’s availability at all times (which a lot of young people, especially women do in Delhi) for which he/she willing to pay. There is welfare gains to the society because I now have a service which has a very short service time (5 mins average) and is always reliable!

    • 1) Are you telling me multinational companies do NOT gouge out their customers for money? My birthdate is not yesterday 🙂 I know how ola operates closely – they keep prices and surges close enough to Uber. Do you know why Shell or Essar, which own private petrol pumps, don’t kepe prices of petrol/diesel lower than the pump rates of IOC/HPCL/BPCL, even though their input costs are lower? Shell and Essar are also large companies. The answer is: because they can.
      2) Please read my argument about surge. People don’t book during a surge. So the cabs are empty. They would prefer to take the ride, but they can’t becasue people aren’t booking them. I have personal experience of standing in front of five Uber cars in Koramangala, even talking to them, while waiting for the surge to decline. Why does that happen? Obviously because the surge is irrational and doesn’t have anything to do with availability – it’sa problem with the algo. But that doesnt matter – the point is: I’m waiting for surge to die, and the drivers are waiting to get a ride, and are wasting time.
      3) The very point is this – driver cannot reach his target because people aren’t taking rides because tehre’s a surge on. It’s simple. Customer didn’t get serviced – he just chose to wait or take an auto. Women do tend to get pissed off at high surge rates too and even tehy will migrate to alternatives if available (like a Meru, which has a fixed rate no matter what). I have personally taken autos and seen women (in Bangalore) take autos when the surge was high. The lack of alternatives is temporary and will last only as long as Uber and Ola are making losses – when they decide to pass on the cost to the rider, I can guarantee that a number of alternative service players will come in (at least one that I know of is waiting for the crunch and has even enrolled drivers in Bangalore).
      Uber or Ola will also face the problem that companies are eventually going to limit surge payments to, say, 2x. Many companies are already doing that. This means if Surge is > 2x (which would put the cost higher than alternatives like Meru or Auto) then an employee will not get reimbursed – so automatically there is an incentive to wait or find alternatives.
      Also remember this: if Cabs aren’t paid “extra” by Uber or Ola, they have no reason to stay loyal to them and pay them 20%. In rush hour, they will just choose to “pick up” people themselves and use some kind of free metering software at a similar non surge rate – thus bypassing Ola and Uber entirely. Because surge pisses off people, they will be happy to sign up direct too. That’s an end-game that Uber and Ola simply do not want.