In a controversial move, Tehran City Council has recently decided to have more control over Snapp and Tapsi internet taxi fares by applying mandatory pricing.
According to Iran digital economy annotation, this decision, which was taken in order to protect the rights of consumers and create balance in the Internet taxi market, has created different reactions among a wide range of stakeholders. The municipality seeks to exert more control over the prices of Internet taxis, while the aforementioned companies assert their independence and point to their positive impact on the transportation sector.
Where did Snapp and Tapsi’s custom pricing story start?
Tehran City Council has announced that it has set fixed and maximum rates for internet travel in order to prevent excessive fare increases and protect the rights of citizens. This decision has been taken following numerous complaints from consumers about price increases during peak hours and special occasions.
Snapp and Tapsi companies have expressed their concerns about the negative effects of this policy on innovation and service quality. They warn that mandated pricing may lead to demotivation of drivers and resulting labor shortages.
On the other hand, the drivers of internet taxis also look at these changes with concern. Some of them believe that this policy will lead to a decrease in their income, while others hope that these changes will lead to more stability in incomes. On the other hand, consumers have had different reactions to this decision. Some welcome the increased predictability of travel costs and lower prices at peak times, while others worry about the decline in service quality.
Experts believe that mandated pricing can benefit consumers in the short term, but in the long term, it may cost the overall taxi market and innovation in the industry. They emphasize that a more balanced and comprehensive approach is needed to achieve a balance between the interests of consumers, drivers, and companies.
Mandatory fare pricing has other proponents
The pursuit of the entry of the municipality and city management into the field of internet taxi fare pricing was not only from the city council. Ahmad Vahidi, the Minister of the Interior, said in connection with the determination of the tariff of internet taxis in early January:
“In this regard, we recognize the municipality as the organization of intra-city transportation, and the municipalities should enter in this area. He emphasized that the organization of intra-city transportation is one of the tasks of the municipalities and determining the tariff of internet taxis is also the responsibility of the municipalities.”
Alireza Zakani, the mayor of Tehran, also entered into this story three days after Vahidi, and in a coordinated statement with the members of the city council and of course the interior minister, he said:
“There is a difference of opinion regarding the issuance of licenses for internet taxis, whether they get a license from a guild or from the municipality. ; We insist that they get the permission from the municipality, which should be the rule of conduct.”
All these criticisms were directed at the current procedure and in order to restore the previous conditions, which was carried out with the aim of determining the mandatory rate of fares for online taxis, in the form of addressing the concerns of the Islamic Council of the city of Tehran and the capital municipality; An issue that, of course, Negin Ansari, the legal deputy of Tapsi, in an interview with news media calls it incorrect and believes that in the guidelines compiled in 2018, all the concerns raised by Tehran Municipality and the respected city council have been seen and in this guideline even one This is one of the concerns raised by the municipality and the council without solutions and answers.
She says: We have answered these cases as much as the hairs on our heads and all the issues have been resolved, but I don’t know why some officials of the country are so inclined to go back. Of course, Mohammad Khalaj, CEO of Snapp, looks at this story from a different point of view.
She believes that although on the surface it seems that command pricing is in favor of the user, it is actually not the case; Because due to the significant effect of each unit of price change on the supply and demand in internet taxis, the command price in this space causes the inefficiency of internet taxis and the transfer of users to the opaque offline market, as a result of which, security and productivity fall drastically, and that’s it.
The process will continue to increase prices. Referring to the global experience in using floating pricing and based on supply and demand, she says: This method has the support of global experience and is by no means an innovation of domestic internet taxis. This method provides the interests of all stakeholders of different services and that is the reason we defend it. In the command pricing model, the interests of all stakeholders are not taken into account, and the comparative and optimization studies of this field at the international level confirm the non-use of command pricing.
Negin Ansari, Legal Vice President of Tapsi Company, also says about the pricing method by internet and online taxi companies: Sometimes there is an idea that our pricing is based on an Excel sheet that only contains the origin and destination, while an artificial intelligence calculates the rate. It determines fares using an algorithm that is influenced by more than 500 different items. This is a complex algorithm that at least 50 people from our 250-strong technical team work on. The Legal Vice President of Tapsi Company emphasizes that the rates of internet taxis are based on cheaper and more trips, not on more expensive and less trips, according to their business model; It is on this basis that their average fares are lower than the rates approved by the municipality, and this has been able to keep people’s interest in using these taxis.
What are the consequences of command pricing?
In the end, if there is even a 1% chance of returning the command rates to the process of online taxis, there is not a good prospect waiting for city travelers and active drivers in these online fleets; Because, according to Snapp’s CEO, with the continuation of the mandated pricing policy, we will face the death of innovation, the reduction of investment attractiveness, and the bankruptcy of the current actors in this field; Because the feature of these platforms is to create transparency in different areas, especially in the field of pricing. A transparency whose benefits cannot be easily obtained in the offline market.
He emphasizes: Our defense of transparent and floating pricing is the defense of modern technology and knowledge of the world; Because this type of pricing is based on current world knowledge, and defending mandatory pricing against floating pricing is like standing against current world knowledge. Exactly the opposite of what is said in the law bill of the 7th plan of the country’s development, which will result in the weakening of the digital economy ecosystem and failure to achieve the 15% goal of the 7th plan.
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