Surge pricing is a technique used by Uber and Ola to raise fares to provide drivers the incentive of keeping their cab running while also making it available for the user irrespective of the demand.
Taxi aggregator Uber has temporarily suspended surge pricing in Delhi-NCR region, following wide criticism for the manifold increase in fares.
On the fourth day of odd-even scheme run by Delhi government, passengers faced difficulties in booking cabs as the platform showed fares to be as high as 5 times than the normal fare.
The US-based firm said it "regularly does surge pricing when demand outstrips supply".
"However, given the threat of the Delhi government to cancel permits and impound vehicles of our driver partners, we are temporarily suspending surge in Delhi with immediate effect. We hope to work with the government to keep Delhi moving, especially during this time when the citizens need us the most," Gagan Bhatia, General Manager (North), Uber India said.
The company said higher prices are required in order to get cars on the road and keep them on the road during the busiest times.
Surge pricing is a technique used by Uber and Ola to raise fares to provide drivers the incentive of keeping their cab running while also making it available for the user irrespective of the demand.
Earlier in the day, Delhi Chief Minister Arvind Kejriwal had warned of "strict action" against app-based taxis including cancellation of permits and impounding of vehicles, for charging fares more than the rates prescribed by the government.
"Strict action, including permit cancellation and impounding of vehicles, will be taken against app-based taxis which charge fares more than government-prescribed rates (sic)," Kejriwal had tweeted.
The government had received complaints of surge pricing after the odd-even scheme was kicked off on April 15. The rates were allegedly also hiked today, the first full working day of the fortnight-long odd-even scheme when offices, schools and other institutions reopened after an extended weekend.
Transport Minister Gopal Rai made an appeal to the commuters to register their complaints at 011-42400400 against exorbitant fares charged by the app-based taxi service providers.
Bhatia said: "It maximises the number of trips and minimises the number of people stranded. The drivers have other options as well. In short, without Surge Pricing, there would be no car available when people need it," he added.
Bhatia said the prices are sometimes higher than its usual low fares during surge pricing.
"But we notify every customer in big bold images in text, which each customer has to confirm in order to request...Airlines and Hotels are more expensive during busy times. Uber is as well," he said.
Contending that the company does not charge surge fee just to make a buck, Bhatia said Uber takes a "small fee of the transaction, and the vast majority of the fare goes to the driver so that we can maximise the number of drivers on the road".
"The point is in order to provide citizens with a reliable ride, prices need to go up temporarily. Despite this, 92 per cent of the trips in Delhi happened on regular fares, even during the first phase of odd-even scheme," he said.
According to reports, Karnataka government has banned surge pricing as a part of its rules for online cab aggregators in the state.
