Uber is bleeding money to keep driving on Delhi’s streets

Changing models.
Changing models.
Image: AP Photo/Rafiq Maqbool
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On Jan. 23, Uber said that it had applied for a license under the Delhi government’s radio taxi scheme and resumed operations in India’s capital city after an almost month-long ban.

Now, the app-based taxi service says that there was something equally important that it didn’t reveal last week: Uber’s return to Delhi’s roads came with a self-imposed decision to become a not-for-profit, at least temporarily.

In a blogpost on Jan. 27, Uber explained that it had adopted Pooch-O’s model, “one already approved and endorsed by the transportation department.” Pooch-O is an app that works as a marketplace between a driver and a rider—just like Uber. It was developed by the Delhi Integrated Multi-Modal Transit System, a joint venture between the Delhi government and the IDFC Foundation, and it charges no commission for its services.

New Delhi is one of Uber’s largest markets in India, with an estimated 3,000-4,000 drivers who are part of its network.

Although all of them are unlikely to be using the platform currently, not charging any commission on rides—typically about 20%—means that the company doesn’t make any money while continuing to pay for operational expenses.

And this situation may persist since Uber’s application for a license under the radio taxi scheme has reportedly been rejected by Delhi’s transport authority because it lacked certain details on its operations.

“We are (now) running a for-loss business,” Gagan Bhatia, Uber’s general manager in Delhi, told Quartz.

But that’s not all.

Weekly payments

Uber—one of the most valuable startups in the world—has actually bled a lot more money in the last few weeks to retain its place in Delhi’s taxi ecosystem, which includes app-based services like Ola and TaxiForSure.

After being banned following the alleged rape of a 27-year-old woman by an Uber driver in Dec. 2014, the San Francisco-based startup paid registered drivers the average weekly wage they were making before the service went off the streets.

“It has cost us but it’s also about retaining drivers,” Bhatia said, “These are real people with real problems.”

Two Uber drivers that Quartz spoke to confirmed that they received the payments.

“They (Uber) have been paying me Rs4,500 ($73) every week after they stopped in Delhi,” said Joy P, an UberBLACK driver. Manoj, another UberBLACK driver, was being paid Rs8,000 ($130) a week.

Bhatia explained that many drivers had bought cars on their own and then joined Uber, so the company felt that it owed them their wages till it resumed operations in Delhi.

“For a vast majority of them, Uber is the only source of income,” an Uber spokesperson added.

Still, all is not well.

A few days ago, according to the Economic Times, Uber’s office in Gurgaon was raided by state police, during which questions were raised about its license and laptops impounded.

An Uber spokesperson didn’t immediately comment on the incident, but denied any connection between its not-for-profit model and the raid.

Moreover, Delhi’s transport authority has said that it will also impound Uber cabs, since the company still doesn’t have a license.

That means Uber drivers remain afraid of returning to the streets.

“I pay Rs34,000 ($553) in monthly installments for my car. The government is still saying Uber is illegal,” said Joy. “If my car gets impounded or something of that sort happens, what will I do?”