Uber to Run a 'No-Profit' Model in New Delhi

Jan 27, 2015 01:00 PM EST | Matt Mercuro


Uber has decided not to take commission from its drivers in New Delhi until uncertainty over how it can operate in the country's capital city is cleared up to locals.

India banned the U.S.-based online taxi-hailing company in the city following rape allegations against one of its drivers. The company restarted services last week however and applied for a radio taxi license, according to Reuters.

A transport official said that Uber remained blacklisted as of Friday.

Uber announced on Tuesday that it choose to go with a similar business model to the government-approved smartphone app "Pooch-O." The popular service connects customers with commercially-licensed auto-rickshaws and doesn't charge users a fee.

"Uber has modified its business model in line with the above framework, and is currently operating without commission or fees until the regulatory ambiguity is resolved," Uber said in a blog post. "This allows Uber to legally operate while working out the details of a long-term solution with the government."

At one point Uber was taking a 20 percent commission from its drivers in New Delhi. Now the company is offering additional incentives like a 250-rupee bonus per trip after resuming operations.

"Definitely it hurts our business as we are not to going make any money. We will in fact spend money to run Delhi operations for our riders," a senior Uber executive, who did not wish to be identified, said to Reuters.

This isn't the first time the company has cut its own profit in order to keep its service running. Uber took the same approach in Germany and Belgium in relation to its UberPop service which lets any driver work as an Uber driver.

Uber is also battling with France, South Korea and Spain over bans imposed because of its drivers weren't licensed. It has also had to fight rape allegations against drivers in Boston and Chicago recently.

Uber was valued at $40 billion last month.  

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