Monday, June 23, 2008

Inflation doesn’t ride on a Meru

Inflation in India is at a 13 year high of 11%, while bank deposit rates are 9% tops. This means leaving the money is the bank is theoretically reducing its purchasing power. And yet when I think about it, good things that beat inflation happen regularly. I bought a computer in the year 2000 for around 45000 rupees. Not top-of-the-line, just latest enough. If I buy a contemporary “latest enough” model today, it should cost me no more than 20000 (with a flat screen monitor rather than the CRT that I currently have). Mobile phones are now available for sub-thousand rupees with features that were considered “sexy” just a few years back. Mobile calling rates are as low as 10 paise per minute, or even free if you subscribe to the appropriate plan. White goods have become so much more affordable too. I was checking out a 32 inch LCD TV, which now costs around 30000 rupees vs. 150000 some 5 years back. The common thread tying all these examples is innovation.

Talking of which, I came across yet another example of innovation – this time in travel. I phoned the “Meru” cab service to drop me to the airport. For starters, there was zero wait time before I was put through to a person who took down my address. As soon as I hung up, I got an SMS about my booking reference number along with a note that the driver’s number and cab number will be SMS-ed half hour before pick up. The cab arrived a few minutes before scheduled time. When I got into it, I was greeted with clean, air-conditioned interiors. The leather seats blended well with the sun film on the windows to give an overall executive feel. The cab had FM radio and a CD player. I got talking to the driver about the system being used to manage the cab fleet - he said it was modeled along the lines of Singapore. For starters, there is no irritating two way radio with its constant stream of messages asking for location of a particular driver or directing another cab driver to an unrelated passenger. Rather, there is a small LCD console where a short message flashes about the next pickup location (e.g., Borivali - W). This message flashes only on console of those drivers who are within a certain radius of the pickup location. All these drivers can then respond back to the message to indicate that they are available. Based on the response, the system picks up the driver who is closest to the pickup point (each car is equipped with GPS) and flashes the entire address only to this driver. This process takes place around 1 hour before the scheduled pickup. Once the passenger gets in and the electronic meter starts ticking, the LCD console blanks out. No further messages are flashed on the console until a bill is generated via an onboard mini- printer. Great, so the driver doesn’t have to be constantly distracted. By the way, contrary to the popular conception, you can wave to a empty Meru cab and it will stop for you if it is not en route to another pickup.

An inside look: Each driver has to put in a 12 hour shift – 7 in the morning to 7 in the evening for the day shift, or 7 evening onwards for night shift. The cab company is responsible for the maintenance of the car, while the cab driver is responsible for the fuel (CNG) and cleanliness of the car. Each day, the cab driver has to pay 600 rupees to the company (7 days a week, 365 days a year). The drivers get to take the cab home after their shift. There is no upper limit to the number of hours the driver can put in, but the cab has to be on the road during the designated shift hours. Pickups will keep flashing on the drivers screen for as long as he is logged on into the LCD console. Once the driver is tired and decides to rest, he has to log off the console. However, the next day, he has to log on by the start of the shift time. This helps with forecasting the number of cabs that will be on road, so that the company can book pickups accordingly. Side note – the drivers are currently asking for at least 2 days off in a month, which I think is a fair demand. To ensure that the company does not face loss of revenue during this period, a small core of drivers can be designated as “rotating” drivers, who would drive cabs of drivers who are on leave.

The charges: Charges are 15 rupees for first kilometer, 13 rupees for each subsequent kilometer. There is no minimum charge. So if you travel only one kilometer, you pay only 15 rupees. Overall, it cost me 263 rupees from home to airport (~19 kms), where a regular non-air-conditioned black and yellow taxi would have quoted a flat rate of at least 300 rupees. Even night time charges are managed very well. Night time charges are from mid-night to five in the morning, the same as black and yellows. However, since the metering is electronic, if you get into a cab at 11:00 pm and get out at 12:05 am, you pay night charges for 5 minutes only (calculated automatically by the meter).

Monitoring: There are four mobile vans that carry out random checks on these cabs. If a cab is unclean, or if the driver has not shaved, is not in uniform or has forgotten his license, there is an spot-fine of hundred rupees. (I suggested that maybe the drivers should additionally wear a tie – that would make them look really smart ... and give an additional cause to the monitoring vans to impose a fine ... he he)

Future Plans: Meru currently has 500 cabs in Mumbai, with plans to go up to 1000. When I asked whether this would affect the regular yellow and black cabs, the driver said it wont, because the number of overall taxi licenses in Mumbai are constant. So if a yellow and black decides to sell its license, Meru buys it and replaces the yellow and black with a Meru. The going rate is 1.5 lac rupees (150,000) for a 10 year license.

All this has come from the mouth of an ex-yellow and black taxi driver. I asked him what was better - his old taxi or Meru. And he was emphatic that Meru was much better. I certainly think this is a win-win situation for all parties!

Bottom note – The root cause for all inflation is the oil prices which has recently hit $136 a barrel. I think this is largely because disruptive innovation in vehicles has been stagnant since almost a century. Agreed the cars are becoming more powerful, cleaner and more sophisticated, but at the end of the day, they are still fuel guzzlers. If only there would have been more regulatory pressure on the car industry to innovate, we would have been in the year 2008 but with 1980 prices.


Blogger Prashant said...

Hi Sameer,
This is really a great news. I never ever thought anything this organized will be there in Mumbai. I ain't complaining. Now only if they start services for airport-to-XYZCity for people who are coming from abroad. Keep writing.

12:52 AM  
Blogger Unknown said...

How long were u there in the Cab ? I mean 'Meru'.... u seem to have had a 'at length' discussion with the cabbie... Cool.. The best part of the blog is that i realsied that this service actually turned out cheaper than the usual 'black yellow' cab.. Damn Neat !!! ne blog abt ur to and fro journey to Pune.. that which is so frequent nowadays ??? I look forward to reading ur experiences..

11:02 AM  

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