Base fare reduction to INR 49 a strategic decision, not a reaction to price war: TaxiForSure
In a move that makes it cheaper than Autorickshaws for short distances, radio cab startup TaxiForSure announced last Saturday a base fare of INR 49 for the first four kilometers in all cities it operates in. The fare drop happens to be the first that TaxiForSure has offered in three years of its operational existence.
"We sat with, and heard our consumers. They were booking taxis for longer distances, for an airport pickup and drop, or for special occasions. But the minimum fare applicable for the first ten kilometers was the hindrance that stopped them from using it for short distances," explained Aprameya Radhakrishna, founder, TaxiForSure.
"Picking kids from school, grocery shopping, visiting nearby malls, meeting friends are some situations where people don’t consider taxis owing to their high fare. But at INR 49, they will be more affordable and convenient than many other options out there,” says Raghunandan G, founder, TaxiForSure.
With the new base fare, the service is cheaper than an auto (in Bengaluru) for rides of seven kilometers or less and for a distance of 15 kilometers, costlier only by a meager eight rupees. TaxiForSure rides in Bengaluru are cheaper than its competitor Ola for distances upto 11.8 kilometers. Ola provides its cheaper version Ola Mini at INR 10 per kilometer (INR 100 for the first 6 kilometers).
Although the consumers are ending up with cheaper rides, Aprameya maintains that the move is aimed at getting people into the habit of using taxis for shorter distances. "This is not a reaction to the price wars waged by our competitors. This is a strategic business decision that we have taken to encourage more people to use taxis for shorter distances. With ETAs dropping to as low as 10 minutes, a consumer would rather take an A/C taxi than haggle with auto drivers."
Radio taxi cabs now enjoy the advantage of having acquired a large number of cabs in cities that they operate in, and leverage this to provide taxis to users withing short spans of 10-15 minutes. If you have tried to book a cab during the peak office hours, you'll know that the supply still is nowhere close to the demand. Even as players like TaxiForSure and Ola continue to rapidly ramp-up the supply, the current demand means that drivers are having almost no empty runs. In addition, the waiting time to get the customers has gone down significantly which has meant more rides in a day for these drivers and higher earnings.
"We have 3500+ cabs in our fleet in Bengaluru and almost 3000 in Delhi," says Aprameya. TaxiForSure which was started by Aprameya R and Raghunandan G in June, 2011, provides its services in Bangalore, Chennai, Delhi and 11 other cities is looking to reach 15 large cities in India by the year end, and in 40 cities by the end of 2015. The company has raised around $50 million from investors Accel Partners, Helion Ventures and Blume Ventures among others. Competitor Ola has just raised a massive $210 million round from Japan's SoftBank.
On being asked whether they were looking to raise more money, Aprameya said that TaxiForSure has enough money in the bank, but a new round might be in the works.
Related read: Working at TaxiForSure is fun for sure
