Revival of Giants
Tags: Business Analysis, Startup Lessons, Life Lessons, Statistics, Covid 19

Analyzing the effects of COVID-19 on Ola Cabs and What we can learn from it

Setbacks are nothing but cues for innovation and change.

Image by Free-Photos from Pixabay

The Corona virus pandemic has been almost like an invasion into our lives. It has wreaked havoc not only in personal lives but also in social, economic and financial sectors along with a dozen others. But it’s the 21st century and fortunately we do have technological advancements to survive. Although is it enough to beat the lockdown crisis? Speaking of technology, how could one forget about the revolution brought about by companies like Ola and Uber which provided us with rides at the comfort of just a click? To understand this better, let us analyze the post Covid situation of app based cab aggregators in India and how they have been affected.

Companies like Ola have always dominated the Indian market in the transportation industry. It has been one of the leading service providers for local as well as long distance transports, that too at affordable prices. But the statutory nationwide lockdown imposed by the government due to the viral outbreak in March lead to a halt in the company’s business and growth.

No doubt there were hard struck financial implications on the cab companies. This was clearly visible when Ola suffered a drop of almost 95 per cent of its revenues within two months. This was followed by a decline in its ride sharing market to almost 50 to 60 per cent. Owing to such tensions amid the pandemic and its consequences on the company’s revenue, Ola co-founder and CEO Bhavish Aggarwal was forced to fire 1400 employees to cut down on superfluous expenses. Besides he had also raised a fund and decided to forgo his own salary for a year to help the nationwide drivers to his best capabilities.

However due to the very obvious and evident consequences of the lockdown, the riderships of Ola (which usually averaged around 1.5 to 1.7 million rides per day) reached at an all time low. This led to lowering of fares and became a major concern steering dissatisfaction and anxiety amongst the cab drivers. Protests and rallies following this were nothing but inevitable corollaries of this dire situation.

Although after the new guidelines of lockdown 4 came in May, few relaxations were made in hopes to revive the economic losses faced by various sectors of the economy. Cab companies left no stone unturned to reopen their businesses and slowly made their way to acclimatize with the new normal. Online portals for booking cabs was made accessible for users across various cities which slowly grew in number.

Due to the horrendous aftermath of the pandemic, public services are now compelled to invest in preventive measures. Ola has invested around 500 crores in establishing the extra facilities and safety measures which are currently being undertaken to maintain appropriate hygiene. This includes regular sanitation of seats and disinfecting surfaces after every ride, strict use of masks by drivers as well as riders and other safety protocols mandated by the government.

Although the foreseeable future still remains unclear, but since the government has laid down it’s unlock guidelines, the per day riderships of transportation companies have started to shoot up recently. It is estimated that Ola would steadily regain its market value by 2021–22.

Ola CEO Bhavish Aggarwal had said, “With the severe impact of COVID 19 especially in the travel and transport sector, it would take time for people to go out and travel like before”. With this in mind, he also plans to rebuild his business and come out of it better equipped than before.

Even though post Covid revival would be difficult, but he aims to cut his extra costs and expenses to manage the company and enhance its standards. To capture the market again, the company would need to reach out to the reopening localities and adapt to the new standards with more agility.

Surely today we feel surrounded by the unknown and dark. But perhaps this could be the time to pioneer into a new era with better solutions and advancements. Maybe renting vehicles for personal use would become a better solution, than that with a driver, in the local transportation industry, as it would cost cheaper and prove to be much safer in the prevalent outbreak. This period could simply be a reminder to explore other areas and perhaps find innovative ways to actually expand businesses. After all one must remember what Albert Einstein said,