Bengaluru: Ride-hailing service Ola (ANI Technologies Ltd) has reduced fares by about 20% in Bengaluru, one of its three biggest markets along with Delhi and Mumbai, upping the ante in the battle against Uber Technologies Inc. for a larger share of India’s online taxi service market.
In an email to consumers on Friday, Ola said the fare for Ola Mini cabs, essentially hatchbacks, have been reduced 20% to Rs8 per km as against Rs10 earlier, while Ola Prime cabs, which are sedans, will cost Rs10 per km as against Rs13 per km earlier.
The price for the cheapest service, Ola Micro, which was launched in March last year, remains unchanged at Rs6 per km.
In comparison, Uber’s cheapest offering, UberGO costs Rs7 per km in Bengaluru while UberX, essentially sedans, cost Rs8 per km.
Ola did not immediately respond to an email seeking comment.
Ola’s move to slash fares comes at a time when the company is fighting a pitched battle with Uber, which is leaving no stone unturned to usurp the local player.
India has emerged as an important market for the world’s most valuable start-up, especially after it sold its China business to local rival Didi Chuxing.
Uber India president Amit Jain told Mint in an interview in September that Uber’s completed trips rose from 165,000 a week in January 2015 to 1.6 million in January 2016 and 5.5 million at the end of August.
Both companies have been trying to wean away consumers from rivals with cheaper rides that not only throws profitability for a toss, but also significantly increases cash burn.
Over the course of 2015, Uber significantly increased its market share by spending heavily on recruiting new cabs, paying huge subsidies to drivers, offering attractive low prices to customers and accepting cash payments from riders. Uber’s market share soared to roughly 40% at the beginning of 2016 from just 5% a year ago, according to Uber executives.
Both Ola and Uber have embarked on a drive to reduce costs in the middle of last year by lowering incentives for drivers, which is one of their biggest expenses. Such a move has led to protests by drivers across cities such as Delhi and Bengaluru, who complain that a drastic drop in incentive has hit their livelihood. Both companies had also increased fares for trips beyond 20km.