Cabs Fare Cheaper Than Autos in Chennai
Meru cabs will operate small cars with a tariff rate that will be cheaper than the auto for city rides.
Cab service provider Meru Cabs will in the next nine months expand its operations to Pune, Chennai, Chandigarh and Ahmedabad. It will introduce fares for short city travel that will be cheaper than the autos. It currently operates in Bangalore, Hyderabad, Mumbai and Delhi.
Chennai has autos fitted with meters but they charge as they like. The company found that the fares charged by the autos were on an average of Rs 20 per km for short trips. The passengers who went for shopping or daily to office or picking up kids from school did not take a call taxi due to inability to get a parking space and have the notion that its costlier than autos.
Meru cabs will operate small cars with a tariff rate that will be cheaper than the auto for city rides. It already has 5500 cars and in the new regions it will add 2000 cars. The company directly owns 300 cars while the rest are owned by the drivers.
The business model is that the driver who enters into an agreement with the company gets help to secure a loan. The company gives business to repay the loan in three years and then the revenue from the transporting goes to him.
On an average, a driver makes Rs 30,000. The company only takes the service charge. Meru cabs which India Value fund has as a major stakeholder made Rs 450 crores profit.
The small car-low rates model was a big hit in Hyderabad, which has 40,000 autos. Recently, the drivers struck work over sharing revenue in Hyderabad and after talks with the authorities and mediation, many of them are back on the roads.
From five cities it currently operates, the call centres handle 15 lakh calls each day. In Mumbai and Delhi, MTS telecom offers free internet to those using Meru cabs. During peak hours, it rejects around 40% of the request for cabs.