In mid-August, the Indian Federation of App-Based Transport Workers (IFAT) and the Telangana State Taxi and Drivers Joint Action Committee wrote to the Reserve Bank of India (RBI) asking for a moratorium on loans to be extended to 31 December 2020, citing losses suffered by the transport sector due to the lockdown. Among the various segments, it’s the app-based transportation that has been affected the most.
The travel restrictions brought in by the lockdown and the mandate to maintain social distancing, led to closure of all private and public transportation during the lockdown. The only exceptions were the transportation facilities availed by and provided for the essential services providers. Most transport, especially app-based transportation, came to a screeching halt overnight depriving many of their only source of income. According to IFAT, while operations have resumed now, partially, the operators are just breaking even. Both tourism and hospitality industries are closely associated with road transport that is highly distressed in India presently.
Risking life to transport essential workers
The lockdown impacted over 20 crore people directly or indirectly dependent on the transport sector. The limited services were plied to ferry essential service providers and making crucial deliveries. IFAT maintains, despite the significant role of the sector during the lockdown, the government did not provide any fiscal benefit to the stakeholders.
Mumbai-based tourist taxi driver Suresh Gupta says, “I risked my life, throughout the lockdown, to transport doctors … at a time when everyone stayed in the safe confines of their homes. I am unable to make the monthly EMI payments towards the loan I procured to buy my taxi. The moratorium isn’t helping much because if tourism doesn’t resume soon, I’ll default on my payments soon.”
Immediately before the lockdown, Suresh was planning to buy another tourist vehicle to “expand his business” and increase earnings. “It was a lucky escape. If I had procured the second loan then today I would be debt-ridden and penniless.” Suresh’s brother Manoj came from their village in Hardoi, Uttar Pradesh to Mumbai in February to help his brother. “My brother has big plans. He wants to own a fleet of tourist vehicles and provide services across India. The lockdown foiled his plans and now we’re not even sure when things will return to normalcy,” says Manoj.
Cab aggregators lose revenue, workforce
Cab aggregators Ola and Uber have been badly affected with the sudden breakdown of operations during the lockdown. Indian ridesharing company Ola Cabs has been offering services that include vehicles for hire and food delivery.
Uber is also a ride-hailing company whose revenue declined drastically, similar to its counterpart Ola. In April and May, Ola’s revenue fell by almost 95 per cent. Co-founder and CEO Bhavish Aggarwal had to lay off 1,400 employees, 25 per cent of the workforce globally, as the company wanted “to conserve as much cash as possible due to the impact of the pandemic” which dried up its revenue.
In May, just over a month into the lockdown, Uber India laid off 600 full-time employees. Uber reduced its global workforce by ‘nearly 6,700 people amid Covid-19’ i.e. 25 per cent of its global workforce and decided ‘to cut investment in non-core projects’ globally. The lockdown impacted Uber severely and the cab aggregator reportedly decided to shut 45 offices globally, including one in Mumbai.
On 5 June 2020, cab aggregator apps Uber and Ola resumed their services in Mumbai after more than two months of inactivity. Both said ‘riders will be able to access the services as per the rules laid down by the Government of Maharashtra for essential travel and that adequate safety precautions are being taken’. Before the lockdown, both Ola and Uber were registering a minimum 14 million rides a week each, in India.
Service providers ensure rider safety
Transport service providers, particularly cab services like Uber and Ola, implemented a slew of safety measures to prevent the spread of coronavirus. These include:
Travellers must wear a mask at all times during their travel in the cab; Cab users must, mandatorily, occupy only the back seat of the cab during trips; No one except the user/traveller is allowed to touch the luggage of the user/traveller to ensure minimum handling of luggage and prevent transmission of any infection; Users must carry a sanitiser and use it to sanitise their hands before entering the cab; It’s recommended that users sanitise their hands while leaving the cab too; Users are recommended to not touch anything inside the vehicle; Social Distancing is maintained by a plastic shield/screen between the driver and the passenger.
The drivers of these cab services are at high risk of getting infected due to the nature of their job. They are also potential high-risk transmitters and ample precautions have to be taken to contain the spread of any infection through the drivers. According to the guidelines:
Both Uber and Ola discontinued their pooling services As part of the mandatory protocol, the cab driver must disinfect the cab after each ride; The driver must maintain hygiene within the vehicle; As per rules issued by the government, the driver must ensure no more than two passengers are seated at a time in the cab and both the riders must occupy the back seat of the cab; etc.
Mandatory checklist as part of protocol
Uber issued a set of instructions to ensure safety of customers during the travel. These reflect on the cab aggregator’s app as well:
• Online Checklist has been added to the app that checks that the driver and the passenger take necessary precautions before taking or booking a ride.
Please use bullet points
• Mask verification is being done and Uber is also urging the drivers to take a selfie with the mask before accepting any trips.
• ‘Feel free to cancel a trip’ feature has been added. The company has updated its policies for cancellation, which now allows the user to cancel a trip if they feel the necessary precautions are not being taken by the driver. Similarly, the driver can also cancel the ride if the passenger does not abide by the guidelines.
Similar checklists and enhanced protocols have been adopted and implemented by transporters who have resumed services in the phase-wise ‘unlock’ in India.
The consumer behaviour has changed drastically during the pandemic and that poses a real challenge to business models and growth plans of transport service providers and owners.
“A decrease in consumerism, a reduction in travel and an increase in work from home will lead to a decreased demand for ride-hailing. I don’t see Uber or Ola getting back to their pre-COVID-19 numbers anytime soon, at least for the next year or two. Their valuations will have to see a recheck,” says New York University Stern School of Business professor Anindya Ghose.
It will be a while before tourism gets back on track fully. Businesses, transport owners, transport service providers and cab aggregators must, in the meantime, improvise to minimise losses and ensure business sustainability. Uber already launched its delivery business during the lockdown and its grocery delivery business has garnered good reviews. The demand is high given people are avoiding stepping out and groceries are ‘essential goods’. Ola is looking to venture into electric mobility sector globally. For now, the transporters are exploring new ways to save time, minimise losses and stay safe.