Navi Taxi Surge Pricing

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The NaviTaxi surge pricing system leverages real-time data and machine learning to balance supply and demand, reduce cancellations, and boost driver efficiency by dynamically guiding them to high-demand areas and adjusting pricing during peak hours.

Motivation

Over 50% of taxi orders in the NaviTaxi app were canceled by passengers, mainly due to long wait times caused by a lack of available cars. Most cancellations occurred during morning and evening rush hours, when demand was highest. This mismatch between supply and demand led us to explore machine learning strategies to address the problem.

Key Business Problems

Mismatch Between Supply and Demand

During peak hours, driver shortages in high-demand areas lead to long wait times, cancellations, lost revenue, and poor customer experience due to uneven driver distribution.

Low Driver Efficiency and Earnings

Drivers spend a significant amount of time without passengers, resulting in low productivity and income, which may affect driver retention and overall service reliability.

Inflexible Response to Demand Changes

The current pricing model doesn't adjust dynamically to changes in demand, limiting NaviTaxi’s ability to scale effectively and meet customer expectations during surges.

Results

30%

Reduction in Order Cancellations

Faster driver response times and better coverage during peak hours can significantly decrease passenger cancellations due to long wait times.

25%

Increase in Driver Earnings During Peak Hours

With optimized distribution and real-time pricing, drivers can earn more by being active in high-demand areas, improving retention.

20%

Rush Hour Ride Boost

More balanced supply and demand leads to a higher number of fulfilled ride requests during the busiest times of the day.

15%

Increase in Customer Retention Rate

Improved service reliability and shorter wait times contribute to a better user experience, encouraging passengers to choose NaviTaxi repeatedly.

Our Solutions

Real-Time Demand Insights and Smart Driver Guidance

To reduce driver idle time and increase earnings, NaviTaxi uses real-time data analytics and machine learning to predict when and where ride demand will spike. By analyzing trip history, weather, events, and behavioral data, the system guides drivers to high-demand zones in advance, ensuring more ride matches and less downtime.

Hexagonal zoning (H3) precisely visualizes demand hotspots.
Drivers see darker zones on the map and reposition in advance.
The system boosts driver earnings and satisfaction.

Dynamic Surge Pricing with Predictive Algorithms

NaviTaxi introduced adaptive surge pricing based on real-time driver availability and demand predictions:

When demand outpaces supply, fares auto-adjust to restore balance.
The model draws drivers to busy areas, cutting passenger wait times.
Fewer delays mean fewer cancellations, better reliability, and retention.
Surge zones are visible to drivers, passengers see the adjusted price.

Predictive Demand Forecasting and City-Wide Driver Optimization

Using historical ride data and CatBoost (a powerful machine learning model), NaviTaxi built predictive models that forecast demand at a granular level—by time, day, location, and events:

These models adjust fares and redistribute drivers, preventing gaps.
The H3 grid prevents overlap and loss, ensuring accurate analysis.
As demand grows, the system scales automatically, ensuring reliability.

Business Benefits

Increased Revenue During Peak Demand

Dynamic surge pricing allows NaviTaxi to capture higher fares during high-demand periods, significantly boosting revenue while maintaining service availability.

Stronger Driver Retention

By reducing idle time and guiding drivers to busy zones, drivers earn more consistently and are more likely to stay on the platform, reducing recruitment and training costs.

Improved Customer Loyalty

Faster response times and fewer cancellations lead to a better user experience, increasing customer loyalty and lifetime value.

Optimized Supply and Efficiency

Predictive demand models ensure a balanced distribution of drivers across the city, minimizing service gaps and lowering the cost of managing supply.

Competitive Advantage in the Market

Fair and adaptive pricing, combined with reliable availability, gives NaviTaxi a strong edge over competitors, attracting both drivers and passengers.