UBER TAXI CAB-HANDLING CRISIS COMMUNICATION

Nidhi Maheshwari

Case synopsis
An extremely difficult situation arose for Uber Cab, a US-based company operating in India, on
December 8, 2014, when its taxi services were banned by the Delhi Government due to growing
anger over the suspected rape of a 27-year-old female executive by one of its drivers. Uber Cab
claims that it offers the “safest rides on the road”, but this episode proved otherwise, as the
accused was identified as a repeat offender. Initial interrogation by the police highlighted the
negligence of the company regarding background checks and police verification while recruiting
driver partners. The police further revealed that the driver did not have a Delhi Transport
Authority-issued license. Furthermore, the company was not able to provide a call log to police,
as such information was said to be gathered at the company’s headquarters in New York. To
handle this situation, Uber Cab suspended its operations until the company could apply for a
fresh registration and trade license. What was the significance of this incident to a brand like
Uber Cab? Could its effect on the regulation of taxi services have been anticipated? How and
when should the brand have reacted? Looking forward, what contingency planning would be
appropriate? Should brand management, customer service management, or the human
resource department have been held accountable, or did the responsibility lie elsewhere in the
organization?

Case study
Even after introducing a subway system in 2002, the public transport system in New Delhi,
India, did not satisfy customers in terms of efficiency and safety. Moreover, the demand for the
subway among those in the affluent segment of customers was falling because wealthy Indians
preferred to travel in well-maintained modern taxis. For them, paying a high price for the
comfort of air-conditioned taxis was a status symbol. However, the scarcity of reliable taxi
services, well-behaved drivers and a proper meter system for both local residents and tourists
represented some of the challenges that the radio taxi transportation system had faced since
the inception of the radio taxi concept in India (Dqi Bureau, 2014). The public system had not
shown satisfactory performance, giving private players the opportunity to cash in on the high
potential market for “radio cabs”; such private companies captured the market quite
effectively. Even the tedious task of calling a taxi to get to the airport was converted into a one-
click action through radio cabs’ booking websites or a simple call by dialing the number.

The radio cab industry in India

In the 1970s and 1980s, the taxi stand – a fleet of Ambassadors parked under a large tree, with
a landline phone number painted on the tree trunk – was a standard feature of almost all of the
neighbourhoods of Delhi. Typically, the taxi stand was run by an energetic and jovial Sikh
gentleman. Other cities had variations of this system, but in metro cities, cabs were mostly used
to go to airports and railway stations. The scenario changed in 2000 with the arrival of radio
cabs. In that year, efforts were made by the government to minimize the unpredictable pricing,
poor service levels and union challenges of the taxi industry through introducing radio taxi
services as a pilot project (Vasudevan, 2014). Specifically, in Delhi, with its fleet of 300 radio
taxis, the concepts of uniform tariffs, reliability and security were realized by the government
with a view to improving the satisfaction levels of customers. However, the tedious three-year
procedure required radio cab operators to obtain licenses, and the financial implications of
these process de-motivated operators, resulting in the withdrawal of their services (Sinha,
2014).

The concept of radio cabs was reintroduced in 2007; the huge potential of the taxi market
motivated private players to revive it. In this year, many private operators started their services
in multiple cities (Exhibit 1).

In 2007, the taxi market in India was highly fragmented and unorganized, comprising individual
car owners and agencies. At the same time, however, the promising returns tempted investors
to invest regularly (Exhibit 2) (Moneycontrol, 2014). The result was that market had grown to
US$160.54m by 2012[1]. In 2014, the total market size of the taxi business was recorded as
US$13bn, and the share of the organized sector was 5 per cent[2]. In 2015, the industry
recorded 35 per cent annual growth on the back of rising demand for car rentals from the
middle class and luxury cars for special occasions. Despite growing tremendously over the past
five years, radio cabs continue to represent a minuscule portion of the overall private taxi
business in cities (Exhibit 3) (Slideshare, 2014).

The taxi market in Delhi

The Transport Department, Government of the National Capital Territory (NCT) of Delhi in 2006
undertook a number of initiatives to provide safe and comfortable taxi services to local
commuters and tourists. At the same time, to ensure quality and safe service to passengers, a
number of measures were prescribed to taxi operators and taxi owners. These included CNG
Taxi, the fixation of fares, the installation of GPS units, the calibration and checking of fare
meters at the time of annual fitness, the installation of Pulsar/Procall meters, etc. (Transport
Department, 2006).

For regulating taxi services, the government introduced the Motor Vehicles Act. The Radio Taxi
Scheme of 2006 is the nodal regulation for the operation of taxi services in Delhi. The scheme
specifies that the licensee must be either a company under Companies Act, 1956 or a society
under the Societies Registration Act, 1860. The company/society must be financially sound and
have good experience in the transportation business and must furnish a bank guarantee, in a
format acceptable to the Transport Department, for an amount of 72,944.35 USD (refer to
Exhibit 4 for key requirements of registration for licensing) (Slideshare, 2014). The available
guideline was ambiguous regarding the techor app-based solutions provided by companies like
Uber, Ola Cabs and Taxi for Sure.

Uber cab service

Travis Kalanick, a college dropout from the University of California, founded Uber Cab in San
Francisco, USA, in 2009. This company was the third venture started by Kalanick, and initially it
was funded by former Google senior executive Chris Sacca and Amazon CEO Jeff Bezos. Prior to
Uber Cab, the two ventures initiated by Kalanick had gone bankrupt, which motivated him to be
extra cautious this time. In 2014, after an investment of US$1.2bn by Fidelity, the company was
valued at US$18.2bn, which was near WhatsApp’s last valuation.

Uber Cab, a company of India’s unicorn generation[3], entered in 2014 and swiftly expanded to
ten cities. It started its operations in Bangalore in a secret testing mode. Later, it showed its
presence in Delhi, Hyderabad, Chennai, Mumbai, Pune, Ahmadabad, Chandigarh, Jaipur and
Kolkata (Business Today, 2015).

The business model of the company was completely different from those of Indian competitors
like Ola Cabs, Taxi for Sure, etc. Uber Cab had not hired any drivers on the company’s payroll;
rather, they created a driver–partner relationship with drivers. Drivers were asked to register
their mobile numbers on Uber’s website. Driver partners were not restricted to work with
them; rather, they were free to operate with other travel and tour operators and pick up Uber
Cab customers whenever they were free. Even the company’s logo was not shared with driver
partners. The physical office and employee investment was the bare minimum. Uber Cab
operated from a four-room office on the ground floor of Signature Hotel, near IFFO Chowk,
Gurgaon, with just three senior officials. When it expanded its operation to ten Indian cities, the
number of employees was raised to around 30 (Times of India, 2015).

The pricing strategy of the company was very different from that of Ola Cabs. The minimum
payout for a journey was kept to INR 200. Different ranges of services were introduced, such as
Uber Cab Black (the fleet of cars available under this range was Mercedes, BMW and Audi) and
UberX (the fleet of cars available under this range was Toyota Etios and Maruti Swift DZire). The
base fare for Uber X was kept at INR 50, whereas the cost per kilometer was INR 15, but the
cost per minute remained the same. Ola Cabs charges INR 200 for the first 8 km and then INR
18 per km for its upscale service, Ola Sedan. While Uber Black worked out to be much more
expensive than competitors’ services like Ola Sedan, UberX was cheaper and proved to be a
strategic move for Uber Cab in India. To give customers a luxury experience, advertisements
were not pasted on the Uber Cab partner cars. In fact, Uber Cab did not own any cars; it just
acted as a middleman between people needing chauffeur-driven cars and cabs that were
available at that place and hour. However, the Uber Cab driver partners must be commercially
registered cab drivers.

Uber Cab’s payment system was portrayed as customer-friendly. When passengers got charged
on their credit card, the money got credited to a Holland-based Uber Cab account near
Amsterdam, from where it was further transferred to a US Wells Fargo account, and then, after
only seven days, 80 per cent of the paid money could be received in a driver’s account in India.

This pricing strategy was objected to by the Reserve Bank of India (RBI), and radio taxi owners’
associations from India filed a complaint against Uber Cab regarding bypassing RBI’s e-payment
laws and remitting the foreign exchange out of India. Uber Cab also faced opposition in Canada,
the UK, the USA, Australia, Germany and Poland on different grounds, such as enrolling non-
commercial cab drivers, charging rates lower than those prescribed by local laws, forex
violations and unsafe driving.

To enhance the efficiency of its business, Uber Cab provided free iPhones (latest models) to all
its driver partners. It proved useful for a driver partner to trace the location of the customer
and deliver on-time customer service. Voice calling and other usages were locked by the
company to avoid misuse by the driver partner (Business Today, 2015).

Recruitment of driver-partners by Uber Cab

Becoming a driver partner for Uber Cab was a simple process. It could be done by just signing
up on the company’s website and submitting personal details. After that, eligible drivers would
be contacted over the phone for a preliminary inquiry and then the approved partner would be
provided with a phone loaded with an app[4]. That is all that was explained on Uber Cab’s site
for background checks.

As tracking was done solely through the phone, turning the phone off or even something as
simple as deleting the app from the phone would remove the car from Uber Cab’s radar. Uber
Cab clarified that they are facilitators connecting passengers with private taxis and not the
owners of the cars in its fleet.

The competitors of Uber Cab in India, like Meru, had GPS systems in their cars, which were used
not only for tracking the cars but also for checking to ensure that the drivers were not speeding.
The competitors installed a panic button for customer use that could alert two trusted numbers
and show the user’s location on a map in an emergency.

Although the NCT stipulated that all taxi providers should carry out thorough background
checks on the drivers working for them, this was not religiously followed by taxi operators,
including Uber Cabs.

The incident
The incident that became a threat to Uber Cab’s presence in India took place on December 5,
2014. That day, the victim, who worked for a finance company in Gurgaon, was returning from
a restaurant after having dinner with her friends. One of her friends dropped her off at Vasant
Vihar, from where she hired the Uber cab and boarded at 9:30 p.m. The incident took place in
an isolated place between Sarai Rohilla and Inderlok. On the way, she dozed off in the back
seat. When she felt that the car halted, she woke up. She found that the car halted at a
secluded spot. The car doors were locked. When she tried to raise an alarm, the driver thrashed
and sexually assaulted her. The victim clicked a photograph of the car’s licence plate and then
made a Police Control Room call to report the incident. The driver (identified as Yadav) turned
off his mobile phone[5]. Immediately after the complaint, when the police inquired about
Yadav’s permanent address, the company was not able to produce Yadav’s permanent address,
and his local address and mobile phone number were unverified[6].

As per Uber Cab’s business functioning, whenever any Uber Cab driver was requested via its
app, the user was shown the photograph of the driver, along with his Uber Cab-issued iPhone
number[7]. However, in this case, the suspect’s iPhone was allegedly not registered in his own
name. Further, the driver switched off his mobile phone, which increased the difficulty of
tracing his location via GPS. Also, unlike its competitors, Uber Cab did not install a panic button
system, which could have prevented this tragedy from happening. But the bigger question was
why the suspect’s iPhone was not registered in his name. Similarly, it was unexplained why
Uber Cab’s software or manual processes did not flag a late-night driver taking an altogether
different route than the planned route.

The Uber cab’s (Delhi) response to the crisis

Immediately after the incident, Uber Cab flashed a message through social media that their
deepest sympathies were with the victim of this horrific crime. Uber Cab spokeswoman Nairi
Hourdajian said in a prepared statement, “We are cooperating fully with the authorities to
ensure the perpetrator is brought to justice[8]”.

Uber Cab CEO, Travis Kalanick, released the following statement to safeguard the brand image
of the company:“What happened over the weekend in New Delhi is horrific. Our entire team’s
hearts go out to the victim of this despicable crime. We will do everything, I repeat, everything
to help bring this perpetrator to justice and to support the victim and her family in her
recovery. We will work with the government to establish clear background checks currently
absent in their commercial transportation licensing programs. We will also partner closely with
the groups who are leading the way on women’s safety here in New Delhi and around the
country and invest in technology advances to help make New Delhi a safer city for women[9]”.
However, the widespread protest against the sexual violence did not come to an end through
the release of sympathy messages; rather, protestors demanded a complete ban of Uber Cab in
India and greater endeavours to ensure women’s security.

On Uber Cab’s website, a promise note focusing on rider safety along with a safety record was
posted on December 17, 2015 to defend the company. The message mentioned that the
company would not accept any commissions from its enrolled driver partners in New Delhi until
ambiguity over how it could work in New Delhi was cleared up[10]. However, the protestors
alleged that the company was not properly managed, and even the company’s representatives
were unable to provide information to the police team for the crucial first few hours. The police
party who was investigating the case reached the Uber Cab office at 8 a.m. on Saturday, but no
information about the driver partner was given until 11 a.m.

Evelyn Tay, spokesperson for Uber Cab, said in an emailed statement to HuffPost India that the
company had fully cooperated with the police investigators. “Upon being notified of this
incident, our team immediately provided the local authorities with all relevant details”, she
said:

This included details of the driver such as name, photo, license details, and bank-verified
address. The information also included details of the cab, and data about the trip,
including pick-up and drop-off locations.
The police investigator shared with media that the commercial driver’s badge, legally required
to drive a cab in the National Capital Region, was not available with the driver[11]

The company’s problems increased after the victimized passenger said that she had not had a
response from Uber Cab despite complaining about the driver in November. The victim accused
the company in a lawsuit filed in US court (in San Francisco, where the company is based) of
failing to properly examine the suspected assailant’s background. Later, company security chief
Philip Cardenas issued the following statement:

We are finding solutions in many places that range from polygraph exams that fill gaps
in available data to adding our own processes on top of existing screening for
commercial licenses. We are exploring new ways to screen drivers globally, using
scientific analysis and technology to find solutions[12].

Though the company tried to defend itself on the point of background checks, in the lawsuit
filed against Uber Cab, it was mentioned that the company could not claim background checks
of drivers as the best available way to ensure the safety of the customers because criminal
checks against a national criminal database were not done by the company while screening
drivers. In response, CEO Travis Kalanick said in a statement that the company would work with
the government “to establish clear background checks currently absent in their commercial
transportation licensing programs[13]”

Again taking the alibi of driver partners’ livelihoods, Uber Cab posted on its blog that the
company needed to apply for a license that would require the ride-hailing company to have a
fleet of at least 200 radio taxis directly owned or owned through an agreement with individual
taxi permit holders. Further, the company mentioned that this time only those driver partners
who had undergone re-verification of their police clearance in the past six weeks would be
allowed to drive. The company urged the Delhi authorities to treat Uber Cab as “on-demand
transportation technology aggregators” and “technology companies”, like the approach
adopted by the eastern city of Bidhannagar, Kolkata, where the commissioner of police passed
an order regulating “on-demand transportation technology aggregators” as “technology
companies[14]”.

In the middle of January, 2016, the company decided to apply for a radio taxi license to operate
through its subsidiary, Resource Expert India Pvt Ltd., registered in Bengaluru and with an office
in Pitampura in Delhi. However, in late January, without complying with its ban, the company
applied for the license and restarted its operations[15].

On the concerns of safety issues, Uber Cab answered that the company would introduce two
new safety features for riders in India – a panic button in its ride-hailing app that would allow
riders to notify the police in case of an emergency and a “safety net” feature to share trip
details and their location with as many as five other people. For daily management, they even
proposed creating a local team to respond to the notifications issued by riders through pressing
the panic button while riding. Further, the company said that physical panic buttons would be
only possible if the owner of the vehicle installed them and if the button called the police
directly[16].

After applying for a fresh license under the modified rules of the 2006 Radio Taxi Scheme, Uber
Cab sent emails to its customers in Delhi, claiming, “We’re back, to serve you and get you
moving once again”. It was mentioned in the passenger email that the company was hopeful
that the Delhi Government would follow the leadership shown by authorities in Bidhannagar,
Kolkata, who had developed a new progressive framework that embraces innovation, supports
consumer choice and ensures the safety of riders. A flat 25 per cent discount was even offered
to customers along with the promise to make each ride a five-star-worthy experience.

The copy of the email in which it was mentioned that the company was “relaunching”
operations in Delhi was sent to the rape victim along with other customers. This audacity of
Uber Cab was disturbing for the victim, who was struggling since the incident, relying on the
legal system. On the other end, the company was neglecting the directions of the authorities.
The 25-year-old woman’s American lawyer, Douglas Wigdor, who was assisting her in an effort
to file a suit against Uber Cab in a US court, shared with the media that the victim and her
family were very upset about this email from Uber Cab, and that the company had come back
to Delhi without engaging with them in a consultation process[17].

On March 26, 2015, the ruling Aam Aadmi Party Government in Delhi asked the Central
Government to block Web-based apps of taxi operators (including Uber Cab), saying that,
despite a ban order imposed on them, they were continuing with their online services.
Transport Secretary and Commissioner Gitanjali Gupta wrote a letter to the Department of
Electronic & Information Technology (DEITY), stating that, despite the ban and undertaking of
Uber Cab, Ola Cabs and Taxi For Sure continued to book passengers through their apps[18].

Keeping in mind all these aspects of misconduct and the gravity of the incident, the government
asked DEITY to block the operation of apps of M/s ANI Technologies Pvt Ltd (Ola Cabs), Uber
Cab India Systems Private Ltd. and Taxi For Sure, so that they could not solicit passengers.
Taking view of Section 12 of the IT Act, DEITY issued a direction on May 15, 2015, to all internet
service providers to block the websites of these firms in Delhi and report compliance. The
notice mentioned that if the ISPs failed to block the sites, action would be taken against them
under Section 12 of the IT Act[19].

The Delhi High Court on Wednesday, July 8, 2015, revoked a government ban imposed on
online taxi firm Uber Cab Technologies, clearing the way for the US-based company to operate
in the capital city and reapply for a license. Welcoming the court’s decision, Uber Cab Delhi
general manager Gagan Bhatia said:

We always had immense faith in the country’s judiciary and welcome the order of the
honorable Delhi High Court invalidating the coercive actions against our driver partners,
actions which have affected thousands of drivers and their families in Delhi who are
dependent on Uber Cab’s technology for a better livelihood. We emphasize the need for
sector-specific regulation for technology-based aggregators in the country. We are
committed to working with the government to develop a regulatory framework that
encourages innovation, provides consumers with more choice, drivers with more
economic opportunity, while creating a safer transportation environment for
everyone[20].