Where to?

Disruption is the buzzword that has dominated boardrooms during the second decade of the 21st century. Public transport is no exception, with e-hailing apps changing the way commuters travel. However, such solutions have been the ire of their “traditional” competition – so how can everyone operate together?

Barely a month goes by without some report of violence towards drivers of e-hailing services – such as Uber and Taxify. Traditionally, the perpetrators have been drivers of metered taxis, who bitterly and maliciously intimidate and sometimes harm the drivers and their passengers.

Lately, news reports indicate that e-hailing drivers are now being targeted by criminals, while there have also been reports of passengers being targeted by criminals posing as drivers. These reports have not been limited to South Africa.

However, there can be no denying that such services remain increasingly popular worldwide. They provide employment opportunities for the drivers and a level of convenience that users of public transport had not experienced ever before. So, what then could the future hold for such services, and will they continue to change the face of public transport?

According to a 2018 Public Passenger Transport Market Inquiry by the Competition Commission, there are more than 12 000 active Uber driver-partners across five cities in South Africa.

Among the identified benefits of such platforms are reduced transport costs; they both complement and compete with existing transport infrastructure; they improve mobility in cities; and offer safe and secure transport.

It quotes the Cape Town Uber Rider Survey, conducted by Victory Research, which reveals that Uber “has created an estimated three-fold increase in the market size” beyond the existing market of traditional metered taxis.

“More than half of Uber users (52 percent) had never used a metered taxi prior to using Uber. Even among the 48 percent of Uber users who have used metered taxis, very few (15 percent) used them frequently. In contrast, 42 percent of Uber users use the service once per week or more,” it states.

In her report: Uber versus metered taxis: A competition issue or regulatory nightmare, Ndumiso Ndlovu, case manager at the Competition Tribunal of the Republic of South Africa, concludes that Uber and other online-based mobile transportation platforms have an important role to play in the taxi industry.

“To supress or completely shun them would be a grave disadvantage to innovation, competition and growth.

“Innovation should be the catalyst for development and should push incumbents to innovate. The display of violent and destructive behaviour should not be tolerated and must be punished accordingly.”

The Competition Commission notes dynamic pricing as such an innovation, as it “addresses challenges of variations in demand across time and space.” For example, says the report, taxi supply has for many years not met demand at peak times.

It adds: “The problem with continuing to impose outdated price regulations is precisely why prices are unable to respond efficiently to demand; resulting in consumers facing long waiting times and poor service, due to limited supply that cannot meet the increased demand, leading to many users being unable to get rides.

“E-hailing services are better able to respond to the fluctuations in demand, and having a more flexible supply ultimately means that consumers are better off. This is because waiting times are low – even in periods of high demand – and overall utilisation is higher as supply moves to periods of high demand.”

With the proposed amendments to the National Land Transport Act (NLTA), the Commission sought to investigate area restrictions. Currently, e-hailing operators are granted metered-taxi operating licences in terms of section 66 of the NLTA, with no distinction drawn between metered taxis and e-hailing taxis with regard to their area of operation.

However, the Commission notes anecdotal evidence which suggests that metered-taxi associations may restrict access to certain ranks, resulting in further self-imposed restrictions on movement. “With the current technology available, taxi ranks are, themselves, outdated notions that are no longer required,” it adds…

It states that area restrictions would be bad for both consumers and metered-taxi operators. (Find out more about the proposed amendments to the NLTA on page 30.)

While the idea of regulating e-hailing services and amending the National Land Transport Act of 2009 is knocked about, it is important to remember that the situation is not unique to South Africa. The Philippines, for example, has become the first country in the world to roll out a legal framework to regulate e-hailing services.

In their report: Out with the old, in with the new: A study on the vehicle hailing preferences of Filipino taxi riders based on participation intent, Andrea Mae M Adriano and Chadwick Co Sy Su, of the University of the Philippines Manila, state: “Philippine Department of Transportation and Communications Secretary Joseph Abaya has acknowledged that technological innovations provide for safer and more convenient commuting options, as well as address the increasing demand for mobility, because of rapid mobilisation.”

They suggest that the traditional street-hailing industry can still take the fight to the e-hailing services. “This should be taken as an opportunity to capitalise on 50 years of experience; the sort that can still manage to outsmart an algorithm hobbled by the country’s poor internet speed.”

“While the regular taxi operators continue to protest against these innovators, they fail to recognise and prioritise the needs of both their drivers and customers. They are merely wasting opportunities to compete in the level playing field. By failing to reinvent themselves, they may very well be the very ones to allow e-hailing cabs to truly become a disruptive innovator,” they add.

Back on the African continent, in his MBA research report: E-hailing applications: adoption and competitiveness of app-based taxi operators in Nairobi, Kenya, Juma Jackson Onyango notes that that there is the need to encourage the assimilation of e-hailing apps to streamline the taxi operation in the country.

“Government and regulators need to find solutions for e-hailing services, as the current taxi providers and drivers feel threatened and complain that they have lost their market share and customers, due to the fact that it is hard to compete with e-hailing providers ,” he says.

“This is because e-hailing offers services that conventional taxi drivers could not provide for ages; satisfying demand for fast, flexible and convenient mobility in the urban areas.”

While the new-age e-hailing services and traditional metered taxis need to find a way to coexist somehow, the question “where to?” remains more pertinent than ever to this industry.