Sympathy for Rapido?

From ‘Rapido draws flak for charging users extra for traffic delays, commuters term it ‘extortion’’, The Hindu, June 3, 2025:

Ride-hailing platform Rapido is under fresh scrutiny from [Bengaluru] users for introducing a charge that penalises passengers if their ride is delayed by traffic. Several commuters in Bengaluru have flagged this new fee levied after 10 minutes of delay due to traffic as unfair and exploitative, especially when traffic congestion is beyond a passenger’s control.

…

Pavithra Rao, a resident of Hebbal, was travelling by auto from Shanthinagara to Palace Guttahalli on Monday when she was hit with an additional fee for being stuck in traffic. “While I don’t have a problem with fair compensation for drivers, charging customers for traffic seems like extortion. I had already selected a Rs 40 tip for my ride as it was peak hour. Traffic is not in my control, and I do not agree with paying extra for it,” she told The Hindu.

Rapido operates by levying from auto drivers a fee of up to Rs 29 per ride, with the precise rate varying by city. Similarly, Uber announced in February this year that it was shifting from being a commission-based to a subscription-based service for auto drivers à la Rapido, although it hasn’t said how much the daily fee is.

Imagine a scenario in which neither platform existed. In life before around 2015, which was such a time, auto drivers charged different amounts to the same people to travel the same route depending on whether they figured a person was a long-time resident of the city. They also charged (non-linearly) more if it was raining, too late in the day, the destination was in a population-wise less-dense area, and, of course, how much traffic there was.

Since the advent of apps like Rapido and Uber — and more so since they adopted a subscription-based model that gave auto drivers more agency as well as commuters the option to walk away from unaffordable rides without a penalty — many of the uncertainties inherent to pricing have vanished.

I regularly take autos to and from work, especially on hot or particularly wet days. Given the specifics of when I leave and the prevalence of one-way routes in each direction, it costs me X rupees to go, 1.2X rupees to return just before peak traffic time, and 1.4X during the peak, all on average. But every single time I’ve had to hail an auto directly (just before peak time), the driver has asked for at least 2.1X rupees. I’m certain thousands of other commuters have had the same experience.

Rapido, Uber, etc. are also constantly responding to location-specific demand. While this means surge pricing at times of higher demand, it has also meant lower base rates when demand is much lower than usual. In April-May in 2023, 2024, and 2025, for example, Rapido set a base cost of 0.75X for my house-to-work route at noon, when it’s been blazing hot outdoors. (I still pay X.)

If only because the apps limit the number of variables in determining the fare, and that this limitation has always only had the effect of lowering the cost of travel, most commuters in cities have an incentive to use them. Axiomatically, if a critical mass of commuters uses them, auto drivers have a strong incentive to use them as well. Note that the uncertainty is lower for auto drivers too (in the subscription-based service scenario): they’re spared the stress of haggling with every commuter and know the app has controlled the price for the length of the route to a precisely marked destination.

(There are many unscrupulous auto drivers out there and there are many unscrupulous commuters as well. I’ve heard from more than a few drivers so far stories of commuters skipping out on UPI payments at the end of trips, hailing autos but not cancelling when their plans change, expecting drivers to drop them off half a kilometre or more from the indicated destination for no extra fee, threatening to lodge complaints after paying less than the predetermined fare, using abusive language, and so on.)

This post benefited from feedback from Srividya Tadepalli.

Even though Rapido has come under the scanner for suggesting commuters ‘bid’ for autos at the time of hailing them via the app by adding extra amounts to the base cost, knowing that the base cost is X has allowed both auto drivers and me — and I imagine other commuters — to develop a shared sense of proportionality. Negotiations from that point are much easier to conduct: an addition of up to 0.4X may be okay for a base cost of X (in non-extenuating circumstances) but expecting an extra of X itself, if a driver is particularly unscrupulous, is grounds for a cuss word.

Further, both commuters’ and drivers’ willingness to use the apps means both parties avail a mechanism — albeit one provided by a third and private party — that sanctions them for misbehaviour. Drivers can rate commuters and vice versa. (Thus I don’t board autos with a rating lower than 4.6 stars.) Commuters can raise complaints with the app, although how each app platform chooses to deal with them isn’t fully clear.

In this scenario, Rapido has come under a second scanner for levying a traffic penalty from commuters. I think it’s fair to the extent that drivers are paying with an opportunity cost — the amount of time spent in traffic — for (i) a commuter’s decision to travel by auto with foreknowledge of traffic en route; (ii) commuters’ (collective) decision to use a particular app; (iii) the app’s decision to recommend a particular route, which is crucial when the passengers’ sense of safety is concerned; (iv) and whose pricing model is beyond both the commuters’ and the drivers’ control. Improving access to autos also means there will be more autos on the road, after all.

But I also agree that it’s unfair to the extent that commuters are expected to pay for the city’s urban planning choices and poor roads and the state government’s under-provision of public transport options and its decision to license so many motor vehicles.

In fact, the crux of the problem is what that extra ‘bid’ at the time of hailing a ride stands for. In my (considerable) experience taking autos in Chennai, drivers almost always ask or expect a few tens of rupees extra because they know a given route is traffic-heavy. Adding the extra cost at the time of hailing the app and later paying for being stuck in traffic is tantamount to commuters double-paying the ‘traffic tax’.

If the additional cost over the base fare is re-justified as a traffic tax to begin with, Rapido won’t have to revive that old source of uncertainty: how much the fare for a trip will ultimately be. The commuter and the driver will both go back to knowing the total eventual fare at the outset. This said, if the extra cost is explicitly related to the tax, and if the overarching goal is to help drivers opt for more rational fares for their rides, Rapido may also reconsider how it is determined rather than allowing it to be arbitrary. Even now, per The Hindu: “The app offers the first 10 minutes of delay during the ride without charge, but thereafter charges Rs 0.50 per minute up to Rs 30, according to the users.”

(If the point really is to rationalise prices, Rapido will also need to explain how it determines the base rate, considering the ‘deficit’ — depending on the drivers’ expectations — is left to commuters to meet.)

In fact, commuters presume more often than not that the government’s responsibility is to lower prices for them — whereas it’s really to rationalise prices for both commuters and drivers. And when the prices are abruptly and after a long time rationalised for drivers as well, the net effect on commuters’ expenses may resemble extortion.

But it’s not extortion: in fact the prices haven’t increased, at least according to the base rates on Rapido and Ola (and gave the impression of having dropped on Uber before February 2025). Between 2014 — when I was taking autos to make many of the same trips I am these days — and 2025, the fare for the X-valued route has remained X. Yet in this time petrol has become more expensive, access to loans more difficult, the cost of living higher, the competition greater, and the roads more congested. Commuters are typically loath to consider the true value of a ride for themselves, which can be higher, and fixate instead on the value for the driver, which they expect as if by default to be lower.

The bigger problem here is the city and the state being okay with chasing a particular slice of commuters towards privately operated ride-hailing apps whose pricing mechanisms are overall unclear and whose services are not infrequently undermined by their own profit motives. But at a more local scale, and especially if the administration doesn’t mediate the disputes between drivers and the apps, its attitude only risks pitting commuters against drivers.

Even if the original sin — i.e. the easy-going relationships between a city or state government and the operators of ride-hailing apps — is greater than some commuters or drivers, it’s also cynical and unfair on both the governments’ and the commuters’ part to allow the culture of commuters underpaying drivers, who have even less power, to persist just so commuters can afford their auto rides. If the government has taken its hand off the wheel, is it so surprising or bad that Rapido is helping drivers opt for more rational fares instead?