Before Uber, Ola and other app-based cab services arrived in Indian cities, Virender Vats never imagined he would deliberately quit his job as a retail manager at a Delhi electronics store to become a driver.

But with taxi aggregator services, the money is undeniably tempting: while passengers get comfortable, air-conditioned cab services for rates as low as Rs 7 or Rs 8 per kilometre, drivers with Uber and Ola often end up with hefty monthly incomes of Rs 50,000 or even Rs 1 lakh.

“I saw young kids making three times more money than I do by working fewer hours as Uber drivers,” said Vats during the course of a ride from Connaught Place to Gurgaon. “I decided to try it for a while and did it after work for a few hours with my own car. I ended up making at least Rs 10,000 every week.”

Two months later, he knew it was time to let go of his retail job. “I love having weekends off to myself and since I can’t sleep at night, I work late hours,” he said. He had only one regret: “I just miss wearing ties to work every day, though.”

Despite customer fears sparked by a few cases of sexual assault by Uber drivers since December 2014, taxi aggregator services have exploded in popularity among urban, smart phone-wielding commuters. In the past six months, they have been eating into the customer base of regular city cab drivers, whose backlash, in some cases, has been violent. In August and September, when taxi unions in Mumbai went on short strikes to protest against Uber and Ola’s cheaper services, there were  reports of Uber taxis being attacked.

More trouble

If the central and state governments have their way, aggregator cab services could be in more trouble soon. The union transport ministry wants app-based taxis to stop calling themselves as “aggregators” and get legal registration under the Motor Vehicles Act, 1988. This would mean that Uber and Ola would have to follow the same legal norms as regular cabs. In December, the Delhi government had already banned Ola, Uber and TaxiForSure from plying on the streets, but they continue to ply anyway at the risk of getting fined.

In Maharashtra, the state is keen to regulate their fares under a “Uniform Taxi Scheme”, which could bring their fares at par with black-and-yellow cabs.

Jumping on the Uber bandwagon

Despite the uncertain future, however, hundreds of people like Vats have chosen to put their conventional careers in marketing or call centres on a hold while they chase the money being offered to Uber or Ola drivers.

For now, despite the government’s regulations requiring police verification of drivers, becoming an Uber driver is not tedious. All one needs is a car, vehicle registration, police verification, a commercial driver’s license, insurance and a few blank cheques to sign up with Uber and start training, which only takes about two or three days. The driver for the next app-based cab you hail could be a university student, a former restaurant manager or just another auto rickshaw-driver who graduated to driving a taxi by learning English and buying a smart phone.

In some cases, drivers are making as much as Rs 1.2 lakh a month, in part due to the incentives such as peak-time bonus that these companies provide their drivers just to keep them on the road. Surge pricing, which kicks in during periods of high demand or in the late night, often inflates the price of the rides by a multiple of two or three times the regular fare.

Juggling roles

It is 11 pm on a Saturday night in Delhi. A family of five waits with luggage outside a taxi stand in the residential Rohini area where their ride to Jaipur was supposed to arrive an hour ago. The owner of the taxi stand is missing and his employees are frantically trying to locate both of them.

When he finally arrives in a sparkling white sedan, the family doesn’t ask too many questions and sets off on their journey. Meanwhile, Satbir Singh, the owner of the taxi stand, emerges from a nearby shop and reveals the real reason why the driver was so late: “He was doing a last-minute airport drop request he got from Uber and he informed us that he will be late, but we couldn’t say that to the family."

Singh’s taxi stand gets around 10-15 requests for outstation trips every week but the work is mostly concentrated on weekends. During the week, Singh and his drivers have all taken to driving for Ola and Uber within the city, earning Rs 5,000 a day on good days. “I have stopped paying my drivers salaries now, and they are free to take the stand’s cars as long as they bear the cost of their own petrol and maintenance.”

Trouble for old cabs

While Ola and Uber drivers seem to be enjoying honeymoon bliss, traditional taxi drivers are growing disgruntled.

“In the 30 years that I have been driving a taxi in Mumbai, I have never experienced a downturn like this,” said Bhulan, the driver of a black-and-yellow cab in Mumbai, who was on strike with most other cab drivers in the city last month. “I used to make between Rs 10,000 and 15,000 a month, but in the past two months, with that Ola grabbing all our customers, I barely make Rs 8,000.”

But Zahir Shaikh, an Uber driver in Mumbai, believes that traditional cab drivers are losing customers because of their own folly. “These drivers need to understand that they cannot be so fussy about refusing fares,” said Shaikh. "If they don’t improve, they won’t survive."

But Bhulan and other drivers are irked by the fact that app-based services openly operate without proper licenses. They are also baffled by the fact that Uber and Ola cabs are air-conditioned: “How on earth do they make profits if they provide an AC and charge less?”

Interestingly, many Uber and Ola drivers spoke to were well aware that the current boom has been subsidised by venture capital, and a few were trying to figure out just how much time they have before the wave starts to weaken.

Jeetendra Ram is among the sceptics. “I don’t believe these high wages will last forever,” he said. “I have kept two cars and only one of those is attached to Ola and Uber. The other one is still doing weekly trips to hill stations. Once the money is over, these firms will come back to regular taxi rates and those without options will not have anywhere to go.”

To shield himself from such a possibility, 40-year-old Dashrath Sharma has been tracking app-based cab services with a business plan in mind. A property dealer in Delhi, Sharma has money to spare and 10 available cars that were left over after a cab-service he tried to start failed.

“I want to provide cabs at realistic rates,” he said. “Rs 7 per kilometer is not feasible for either the company or the drivers. They are paying out of their pockets to drivers for now but it’s not helping anyone.”

Sharma wants to build a hyper-local Uber for his locality and use his 10 cars to service customers at a flat rate of Rs 14 per kilometer but with a few caveats. “A passenger must take minimum five rides a week to avail these rates,” he said. “But consumers will sign up because they know there would be no surge pricing, no hassle of linking credit cards all the time and no fear of government stopping the service. We will also allow pre-booking of cabs which Uber doesn’t.”

As taxi apps continue to zoom past each other with thousands of rides every day, business owners will jostle to adapt their companies to the new challenges. But until something goes horribly wrong, it’s the riders who are set to win this race, without even driving.

With inputs by Aarefa Johari. Some names have been changed to protect identities of the drivers.