Tag: airport

Cabs to airports

Early yesterday morning I had a minor scare when Mega Cabs stood me up. I had a flight to catch at 7 am to Mumbai, and had booked a Mega Cab for 5am. This was after consulting a few friends who are frequent travellers on Monday mornings, who advised that finding an Uber or Ola at 5am is not particularly straightforward. I must mention that I haven’t done business trips for a while, which means I haven’t had to catch 7am flights, so the last time I took one such flight was before Ola/Uber became big in Bangalore (October 2014). And I’ve always preferred Mega to Meru since their cabs are relatively better maintained and more prompt.
And then Mega stood me up. The assigned driver Nagesh N never called me, and when I called him, didn’t pick up. I didn’t panic, since I knew I could get a cab on Uber or Ola, except that neither had any cabs available. I called Mega customer care, who promised an alternate cab at 5:15 (still leaving enough time to get to the airport and catch my flight). But then I received an SMS saying that I’ll get a cab at 6:15. Rather than arguing with Mega, I tried Uber once again, and this time I was in luck, finding a cab that would take me to the airport at a surge of 1.8X (80% more than the “normal” fare).
So on the way to the airport I got talking to Kumar, my Uber driver, about the economics of cab rides in Bangalore, and airport trips. As I had mentioned in my earlier post on Uber’s new pricing model, the reduction in per kilometer fare and increase in per rupee fare has meant that an airport run is normally not remunerative for an Uber driver. Add to this the fact that Uber’s bonus payments to drivers are on a “per trip” basis rather than a percentage or distance basis, that a driver reaching the airport at around 6am has to wait for at least a couple of hours to get a passenger to ride back to the city, and that Uber’s new bonus structures that began today not paying much incentives for trips before 7 am (this was told to me by Kumar), drivers have responded by simply not switching on their Uber systems at 5 in the morning, when the likelihood that any trip is an airport run approaches 1.
This is clearly inefficient, and  consequence of bad pricing on behalf of Uber. On the one hand, drivers are denied opportunities to carry customers over long distances, which is an airport run. On the other, customers are inconvenienced thanks to the lack of cabs, and have to rely on the otherwise rather unreliable and mostly unused Meru or Mega cabs, whose cars are of poor quality and drivers unresponsive. A lose-lose situation. All thanks to bad regulation (read my post in Pragati on how Uber is like a parallel regulator).
The solution is rather simple – an airport surcharge. Any trips to or from the airport on Uber can be slapped a further surcharge (of Rs. 200, perhaps). Such a surcharge will make the ride remunerative for drivers, while at the same time still keeping Uber much cheaper than the likes of Meru or Mega. In fact, this morning’s trip, after the 1.8X surge, cost me Rs. 780, which is cheaper than what it would have cost me if Nagesh N of Mega Cabs had not ditched me, and I could pay in a “cashless” manner, directly from my Paytm account. It’s a surprise that Uber hasn’t yet figured this out, given all their “data science” prowess!
Update: 
A friend who I met on the flight told me that in his town (Whitefield) it’s not hard to find an Uber/Ola cab at 5am on Mondays, except that the drivers cancel rides once they figure out it’s for an airport drop. Again pointing to the fact that incentives are not aligned for maximum throughput

Bangalore airport has become horrible

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Flying domestic after a really long time. The last time I did was back in august. And the Bangalore airport seems to have become horrible in the meantime.

Check out the picture. Gates so close together and hardly any seats for passengers to wait on. Now it’s well known that most domestic flights have 150-180 seats. How hard is it to design waiting areas to seat so many people per flight?

And the Bangalore airport has just been expanded and it’s so congested. Talk about continuing to underestimate growth!

The only hope is that this is a temporary arrangement and once the expansion is complete we’ll have better waiting space.

Receiving people and waiting for luggage

This morning was the first time ever that I’ve successfully received someone at the airport. Yes, the “successfully” was purposely inserted there, for I’d once driven up all the way to the Bangalore Airport only to find that the wife, who I had gone to receive, had already left by cab (her flight had landed early and baggage come out quickly). Apart from that one attempt in 2011, I’ve never ever gone to receive anyone at any airport – done a lot of receptions (not that kind of reception, silly) in railway stations, though!

So this morning I was again receiving the wife, who has come to town on vacation having completed one term of her MBA. I took the bus to the airport and reached at 8:30, in anticipation of the 8:50 flight, only to see that the flight from Dubai had “landed”, harbouring visions of the last time I’d (unsuccessfully) gone to receive her! Moreover, there was no way for me to reach her, for her Spain number doesn’t work here, and her India number was in my phone (I have a dual SIM phone!)! And so I stood at the arrival gate and waited, hoping that she had not missed me!

And while I was waiting there I realised that waiting for someone at the airport is like waiting for your luggage once you land. You know the flight has landed (in one of the cases, you actually travelled by it). But you know that the time taken for either your luggage or the person you’re waiting for to come is stochastic! And you hope that you’ve had a good day, and that the person/luggage comes asap!

In the luggage case, for a while the baggage belt is empty, and then bags start appearing. That’s when you start getting hopeful, waiting for your bag to arrive! Till there is baggage on the belt, you are at peace, using the restroom and retying your shoelaces and getting hold of a trolley if necessary! But once the baggage is on the belt you start getting anxious, and start harbouring notions of what if your baggage has not arrived!

Receiving your wife at the airport is also similar. Till you know that people from her flight have started to come out, you are at peace. You go get yourself a cup of coffee (have you noticed that coffee at Hatti Kaapi at the Bangalore arrival gate is much cheaper than that at Maiya’s at the other end of the airport? That’s for another blogpost!). You people watch, you observe the structure of the airport and (if you are a first-time receiver like me) observe what the arrival gate looks like from the outside.

And then people start arriving with Dubai Duty Free shopping bags (the wife flew Emirates) and that is the equivalent of the first bag arriving on the belt! And now you become tense, start wondering if the wife successfully made it to the flight (she was connecting via Dubai), and if her baggage made it to the flight, and why she’s taking so long. And then she arrives. It’s the kind of joy you have when you see your bag on the far end of the carousel and can’t wait for it to get to you! And then it arrives and you pick it up (in case of the wife, not literally) and off you go!

Meru’s pricing strategy

Let’s assume I’m writing this post two weeks back when Uber, Ola and TaxiForSure were still running successfully in most places in India. Since then, they’ve been banned to various degrees and it’s gotten harder for customers to get them and for drivers there to find customers leading to a sharp drop in volumes.

Thanks to the entry of app-based taxi booking services such as Uber, Ola and TaxiForSure, entrenched players such as Meru Cabs and Easy Cabs started losing business. This is not unexpected, for the former operated at around Rs. 13-15 per km range (depending on discounts, time of day, etc.) while the latter operated around the Rs. 20 per km price point. This meant that for immediate trips and mostly intra-city movement consumers eschewed the likes of Meru and embraced the likes of Ola.

In the last few weeks I’ve spoken to taxi drivers (mostly Uber; Ola drivers don’t inspire much confidence and so I don’t indulge them in conversation; and I’ve never got a cab via TaxiForSure) who have been affiliated to more than one aggregator, and from that I get what the problem with Meru’s pricing is.

What sets apart Meru, KSTDC and Mega Cabs is that the three are the only operators with a license to pick up passengers from the taxi rank at the Bangalore Airport. Any other taxi that you might book (Ola or Uber or a local cabwallah) don’t have the rights to pick up passengers there and park in the airport’s taxi parking zone. They instead have to park in the space allocated to private cars, paying the parking fees there, and  there is usually a delay from the time when the driver meets the customer at the arrival gate to the customer actually getting into the car. This distinction means that the likes of Meru and Mega offer superior service to the other operators at the airport and thus can command a premium price. Getting into anecdata territory but I always prefer to get a cab from the taxi rank (though the queue occasionally gets long) than to book a cab for which I’ve to wait.

At the city end, the difference between Meru and Uber (Ola is in an intermediate state) is that you can pre-book a Meru, while Uber only accepts “spot bookings”. This difference in service levels means that you can never be assured of getting an Uber at the time you want to leave for the airport – there is a statistically high chance of getting one but you don’t want to take the risk, and thus prefer to pre-book a Meru or a Mega, which lets you know at the time of booking if they are able to service you.

Now, this guarantee from a Meru or a Mega comes at a cost. An Uber cabbie who also drove for Easycabs told me that Easycabs would allocate his trip an hour before it was scheduled to start. Since Easycabs would have assured the customer of a cab reaching his place at the appointed time, this means that they need to account for a sufficient buffer to ensure that the cab does reach on time. Thus the allocation an hour in advance. This cabbie told me that from his point of view that was inefficient, for in the one hour of buffer that EasyCabs would add, he could complete one additional trip through Uber!

So it is clear as to why Meru is more expensive than Uber/Ola – their pre-booking provision means that they have to potentially ground your cab for an hour before pickup, and there is a license fee they have paid the airport for the right to pick up passengers from the taxi rank there. Notice that both these factors also result in increased convenience for passengers. So effectively, Meru is justified in charging a premium. The question is if the current structure is optimal.

The problem with Meru is that their fare structure doesn’t appropriately represent cost. A pre-booked taxi costs as much as a taxi hailed at the time of demand. A taxi from the airport (where they have paid license fee) costs as much as a taxi from anywhere else. So while their cost structure might be optimal for travel to and from the airport, the structure simply doesn’t work out for other rides. And they are getting priced out of non-airport rides.

Assuming that they want to get more non-airport rides for their fleet, how do they do it? The answer is rather simple – let the fare structure reflect cost. Rather than tacking on every piece of cost to the per kilometer fare, they can have a multi-part fare structure which is possibly more “fair”.

A typical trip from the airport to the city is about 40 km, and costs around Rs. 800 (excluding service tax). Instead of charging Rs. 20 per trip, how about charging Rs. 16 (Ola’s rate) per kilometer and an additional Rs. 200 “airport charge”? At the other end, how about charging an additional Rs. 100 or Rs. 200 as pre-booking charge in order to account for driver’s idle time on account of the pre-booking? If they were to charge this way, they will both make as much money as they currently do on airport trips, and also compete with Ola and Uber on intra-city immediate-ride trips.

To take an extreme analogy, this is like asset-liability management – prudent banking dictates that the term structure of your assets reflects that of your liabilities. Similarly, prudent pricing (to the extent it is practically implementable) dictates that your price structure reflects on your cost structure!

Bachelor notes: day zero

I’m writing this having just dropped the wife at the airport. I’m taking the bus back home. While it helps that this bus goes 200m from my house and i saw it leave just when I was ready to leave the airport, I realize that with the wife not at home there’s no incentive for me to get home asap. A little delay doesn’t hurt!

And to think that the last time I took the airport bus home was one week shy of five years ago, which was a month before I first met the lady who is now the wife!!

While I’m at it I’m suddenly reminded of the time eleven years ago, when I was at IIT and decided I wanted to “slow down the pace of life”! And my way of achieving that was by selling my cycle!

Something tells me I’ve written about this recently on the blog but I’m on the mobile and hence too lazy to check right now!!