TECH­NOL­OGY VS THE TAXI TRADE

Trans­porta­tion net­work com­pa­nies are see­ing brisk busi­ness in the Mid­dle East and, for the present at least, are co-ex­ist­ing with and com­ple­ment­ing the tra­di­tional taxi in­sti­tu­tions. But will there come time when e-hail­ing and rideshar­ing start to threate

Qatar Today - - INSIDE THIS ISSUE - BY AYSWARYA MURTHY

Trans­porta­tion net­work com­pa­nies are see­ing brisk busi­ness in the Mid­dle East and, for the present at least, are co-ex­ist­ing with and com­ple­ment­ing the tra­di­tional taxi in­sti­tu­tions. But will there come time when e-hail­ing and rideshar­ing start to threaten the Kar­was and the Dubai Taxis of the re­gion, as has been in the case else­where around the world in re­cent months?

If you don't drive in Doha, the two most fre­quent ex­pe­ri­ences you'll have as you try to navigate your way around the city is ei­ther a for­lorn vigil un­der the scorch­ing sun wait­ing for a glimpse of green or be­ing am­bushed by touts of­fer­ing rides, who of­ten might be op­er­at­ing il­le­gally. Af­ter a few days of the for­mer, the lat­ter would start to seem like a bless­ing. Longterm res­i­dents will at­test to the fact that the sit­u­a­tion has re­mained un­changed over the years, de­spite mush­room­ing pri­vate li­mou­sine com­pa­nies and in­creased num­bers of Karwa taxis on the roads. It was re­ported in Jan­uary this year that 4,000 Karwa taxis will be in ser­vice by the end of 2014 with two new fran­chisees set to launch 500 taxis each. The bur­geon­ing pop­u­la­tion is swal­low­ing up the sup­ply and there is never enough to go around. The time is ripe for ser­vices like Ca­reem and Uber.

Launched in Doha within months of each other, both these com­pa­nies of­fer users the abil­ity to hail cabs through their smart­phones and make pay­ments on­line. GPS based track­ing, ac­count­abil­ity and cus­tomer ser­vice add up to make these ser­vices a valu­able lit­tle pack­age. “A plat­form tai­lored to the un­der­ly­ing re­al­i­ties of the Mid­dle East,” as Mu­das­sir Sheikha, co-founder of Ca­reem puts it. Why would any­one have a prob­lem with this any­where?

With the news of driv­ers of the iconic Lon­don black cabs go­ing on strike to protest against ser­vices like Uber, the nat­u­ral thought was: “here we go again. Another re­boot of The Lud­dite Re­volt”. This was, of course, a gross over­sim­pli­fi­ca­tion and more re­search on this proved as much. Yes, tech­nol­ogy was dis­rupt­ing their way of life and eas­ily re­plac­ing the ‘knowl­edge' they had gath­ered over many years, but their core con­cerns were un­fair com­pet­i­tive ad­van­tages and mis­man­age­ment by the govern­ment au­thor­ity, Trans­port For Lon­don, dubbed as To­tally Fail­ing Lon­don. Though this was the most widely pub­li­cised in­ci­dent, it was by no means an iso­lated one. Across con­ti­nents, from Barcelona to Chicago, there were mur­murs of dis­con­tent in the taxi in­dus­try. And Uber, that had come to rep­re­sent the many trans­port net­work com­pa­nies (TNC) that were be­com­ing ubiq­ui­tous and wit­ness­ing un­par­al­leled growth, was in­vari­ably at the cen­tre of it all. With the rapid ex­pan­sion of TNCs in the re­gion, should Mid­dle East's taxi­cab driv­ers start pre­par­ing for the in­evitable? Should Uber and its ilk?

Well, no. Not yet, at least. Be­cause the mar­ket is far, far from be­ing sat­u­rated. The phe­nom­e­nal growth of both Uber and Ca­reem can stand ev­i­dence to this. Since its Septem­ber 2013 launch in Dubai (which was Uber's 40th city glob­ally), the com­pany has launched in Abu Dhabi, Doha, Riyadh, Jeddah and Beirut ( by which time Uber's global cities count had risen to 144). In Doha es­pe­cially, their growth has been faster than in Dubai, be­cause of the lack of pub­lic trans­port op­tions (like the highly pop­u­lar Dubai Metro) and dif­fi­culty of find­ing taxis in the sub­urbs, says Ma­jed Abukhater, Gen­eral Man­ager for Uber, Mid­dle East. Ca­reem, af­ter rais­ing $1.7 mil­lion (QR6.2 mil­lion) in in­vest­ment last summer, is now op­er­a­tional in eight Mid­dle Eastern cities, ser­vic­ing over 50,000 users through 2,500 plus cars, and is grow­ing at 30% ev­ery month, ac­cord­ing to Sheikha. It is dwarfed by the sheer vol­ume of taxi us­age, though; in Dubai alone, over 100 mil­lion taxi trips were taken last year. “The taxi in­dus­try in the re­gion is big; peo­ple rely on them a lot and will con­tinue to do so,” says Abukhater. “It's not about us re­plac­ing them. The mar­ket is large and is set to grow so fast that there'll al­ways be enough room for all of us. It's com­ple­men­tary rather than

"It's not about us re­plac­ing them [the taxis]. The mar­ket is large and is set to grow so fast that there'll al­ways be enough room for all of us. It's com­ple­men­tary rather than com­pet­i­tive at this stage." MA­JED ABUKHATER Gen­eral Man­ager Uber, Mid­dle East

com­pet­i­tive at this stage. It's us mak­ing the mar­ket bet­ter to­gether.” Hitherto, Uber has avoided en­croach­ing on the taxi­cab mar­ket as the ser­vices they pro­vide here cater to a nar­row seg­ment of cus­tomers. With Uber Black as their core prod­uct, they deal in lux­ury cars and a higher price bracket and hence don't see taxis as di­rect com­pe­ti­tion. “We launched UberX only in Jeddah and Abu Dhabi. The dif­fer­ence is in the type of cars and the price point, which is slightly lower than Uber Black,” Abukhater ex­plains.

UberX how­ever, means dif­fer­ent things in dif­fer­ent cities and to get to the nub of the is­sue, it's im­por­tant to go be­hind the scenes first. Uber and Ca­reem have very sim­i­lar busi­ness mod­els with a few dif­fer­ences; for ex­am­ple, the abil­ity to pre-book taxis with Ca­reem which isn't an op­tion with Uber. “In all mar­kets, we work with li­censed li­mou­sine op­er­a­tors,” Sheikha says. “Once we sign a con­tract with a li­mou­sine com­pany, we screen and in­ter­view their driv­ers, test them on driv­ing safety, nav­i­ga­tion knowl­edge, com­mu­ni­ca­tion skills and cus­tomer ser­vice ori­en­ta­tion and only give our de­vices to driv­ers that meet the stan­dards. And for pro­vid­ing the tech­nol­ogy plat­form, do­ing sales and mar­ket­ing, main­tain­ing the in­fra­struc­ture and of­fer­ing cus­tomer ser­vice, we take about 20% com­mis­sion from the fare for each ride.” Uber too works solely with li­mou­sine com­pa­nies and not in­di­vid­ual driv­ers, un­like in other cities like Paris where any pri­vate car owner with an in­sured ve­hi­cle and a driv­ing li­cence older than three years can ap­ply to drive for Uber. Rideshar­ing, as this ser­vice is called, has the po­ten­tial to turn the heat up on taxis, if and when in­tro­duced. Much of the gripe around TNCs glob­ally is around this as­pect of their ser­vice (in ad­di­tion to other con­cerns like low fares and li­cens­ing). Sheikha be­lieves that as long they work with li­censed taxi/ limo providers in their mar­kets, they will not have to deal with the kind of strife that we are see­ing in Europe and North Amer­ica. “The trou­ble starts when you start em­pow­er­ing your or­di­nary Joe to com­pete with taxis,” he says.

But rideshar­ing is cur­rently not on the agenda for ei­ther com­pany here. Abukhater says they are not eval­u­at­ing the in­tro­duc­tion of the ser­vice at this point be­cause there is still so much to do with their ex­ist­ing prod­uct. And what with all the trou­ble they have faced in var­i­ous cities dur­ing re­cent months over not fol­low­ing ap­pro­pri­ate reg­u­la­tory and li­cens­ing laws, they are be­ing ex­tra care­ful about com­pli­ance. A dicey propo­si­tion when you con­sider how this may en­able the ram­pant il­le­gal taxi racket to come out of the shad­ows and pose as a le­git­i­mate com­pe­ti­tion to taxis. An in­ter­est­ing ex­per­i­ment is tak­ing place in Dubai with Car­pool Ara­bia, which launched a beta ver­sion of its web­site in Fe­bru­ary this year, and Dubai's Road Trans­port Au­thor­ity. How the ser­vice works (or doesn't work) in tan­dem with the RTA's Sharekni Sys­tem, which was put in place to en­cour­age car­pool­ing while clamp­ing down on il­le­gal taxis, would prob­a­bly set a prece­dence on how rideshar­ing is im­ple­mented in the re­gion.

ANOTHER IS­SUE TO CON­SIDER IS WHETHER THE GCC POP­U­LA­TION WOULD BE IN­TER­ESTED IN RIDESHAR­ING IN THE FIRST PLACE, NOVEL AND PROF­ITABLE THOUGH THE EX­PE­RI­ENCE MAY BE. “THE JURY IS STILL OUT ON RIDESHAR­ING IN THE MID­DLE EAST,” SAYS SHEIKHA. “MOST OF THE GCC COUN­TRIES, BAR­RING SAUDI ARA­BIA, DO NOT HAVE LO­CAL POP­U­LA­TIONS THAT WILL PAR­TIC­I­PATE AND IT IS NOT CLEAR IF EX­PA­TRI­ATES CAN PAR­TIC­I­PATE LE­GALLY. THIS ALSO RE­QUIRES AN EL­E­MENT OF TRUST IN STRANGERS WHICH IS MORE PREVA­LENT IN THE WESTERN WORLD THAN IN THE MID­DLE EAST.”

The taxi in­dus­try will, sooner rather than later, get with the times. The RTA has al­ready in­tro­duced Smart Taxi, an app that can “e-hail” taxi­cabs in the vicin­ity. Part of Dubai's Smart City ini­tia­tive, the app will cover over 9,000 of these ve­hi­cles cur­rently ply­ing across the city. Across the re­gion, there are a lot of op­por­tu­ni­ties in this space for tie ups be­tween TNCs and taxis, like Lon­don's UberTaxi which al­lows users to sum­mon black cabs. Sheikha says this kind of “col­lab­o­ra­tion with the reg­u­la­tors to make our tech­nol­ogy more widely avail­able to other stake­hold­ers in the ground trans­porta­tion ecosys­tem” is one way they can help spin any re­sent­ment that might arise in the fu­ture.

“FOR US, COM­PE­TI­TION IS YOU DRIV­ING YOUR OWN CAR. AND, ON A NICE DAY, YOU WALK­ING TO YOUR DES­TI­NA­TION. COM­PE­TI­TION IS AL­WAYS GOOD, BOTH FOR OUR CUS­TOMERS, WHO HAVE MORE CHOICES, AND US, BE­CAUSE IT COM­PELS US TO CON­TIN­U­ALLY IM­PROVE AND IN­NO­VATE,” ABUKHATER SAYS.

In Qatar, its un­clear if Mowasalat is work­ing on some­thing sim­i­lar for the Karwa cabs. But the pri­vate sec­tor is al­ready on it. Q-Cab, which is cur­rently be­ing in­cu­bated at Qatar Busi­ness In­cu­ba­tion Cen­tre, will make get­ting hold of those no­to­ri­ously scarce Karwa taxi­cabs eas­ier, says Tariq Awadallah one of the found­ing mem­bers of of the start-up. With the TNCs that are al­ready op­er­at­ing here and new ones like Easy Taxi ru­moured to en­ter the mar­ket soon, Awadallah knows com­pe­ti­tion is go­ing to be stiff. But ei­ther way, the de­mand is glar­ingly ob­vi­ous and some­one will have to meet it.

“Our plan is to di­rectly sign on Karwa driv­ers (in­clud­ing those work­ing for the fran­chisee com­pa­nies) and se­lect those who al­ready have a smart­phone so that they can start us­ing the app to find cus­tomers,” he says. At this stage he is not look­ing to deal with the le­gal is­sues and com­pli­ca­tions that might arise from en­ter­ing into con­trac­tual agree­ment with com­pa­nies. “Even­tu­ally, when we man­age to sign up enough driv­ers and cap­ture a good amount of the mar­ket, we might ap­proach Karwa for a tie-up that will in­tro­duce Q-Cab to 100% of their taxis,” Awadallah says.

Right now their fo­cus is on con­nect­ing cus­tomers and driv­ers in a sim­ple and user-friendly man­ner. “Peo­ple wouldn't have to wait for­ever for taxis out­side on the streets or be forced to use il­le­gal taxis” [in­ci­den­tally, when caught both the driver and pas­sen­ger are pe­nalised] “and the taxi driv­ers can also max­imise their rev­enue.” In the sur­vey they con­ducted dur­ing their cus­tomer val­i­da­tion phase, 17 out of 20 taxi driv­ers said they would use such an ap­pli­ca­tion if avail­able.

Even within the GCC, each city is unique in terms of what pub­lic trans­port in­fra­struc­ture is avail­able to its res­i­dents, the qual­ity of such fa­cil­i­ties and how TNCs fit into the larger scope of things (a case in point is how the use of New York's Taxi Medal­lions as an in­vest­ment as­set is be­ing threat­ened by TNCs). “Just be­cause these strikes hap­pened in one place, doesn't mean they'll hap­pen in another,” Abukhater says while point­ing this out. Fur­ther­more, un­likely as it may be for taxi driv­ers in Doha to come to­gether to protest any­thing (keep­ing in mind that trade unions are il­le­gal in the coun­try), many of them are still obliv­i­ous to the ex­is­tence of ser­vices such as these that are draw­ing away cus­tomers that they never had in the first place.

"Our plan is to di­rectly sign on Karwa driv­ers (in­clud­ing those work­ing for the fran­chisee com­pa­nies) and se­lect those who al­ready have a smart­phone so that they can start us­ing the app to find cus­tomers."

TARIQ AWADALLAH Co-founder Q-Cab

Black Cab driv­ers in Lon­don go on strike against com­pa­nies like Uber cit­ing un­fair ad­van­tages and non-com­pli­ance to reg­u­la­tory rules.

AFP PHOTO / CARL COURT

"As long we work with li­censed taxi/ limo providers in our mar­kets, we will not have to deal with the kind of strife that you are see­ing in Europe and North Amer­ica. The trou­ble starts when you start em­pow­er­ing your or­di­nary Joe to com­pete with taxis."

MU­DAS­SIR SHEIKHA Co-Founder Ca­reem

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