Uber under fire

SA Taxi, which bought Zebra Cabs last year, says it hasn't been affected by Uber's cut in price.  PHOTO: leon sadiki
SA Taxi, which bought Zebra Cabs last year, says it hasn't been affected by Uber's cut in price. PHOTO: leon sadiki

Eight regional taxi companies and 150 individual members of the SA Meter Taxi Association have filed an application against Uber with the Competition Commission, alleging that the US-based company is engaged in predatory pricing and anti-competitive behaviour.

Predatory pricing is the act of setting prices low in an attempt to eliminate competition.

Association chairperson Faye Freedman, who is also the CEO of Eagle Taxis in Durban, confirmed this week that her association had filed the complaint and the members involved with the application employed about 1 000 people.

Uber is facing a similar case in New York, where taxi drivers are suing the city and its taxi and limousine commission, alleging that the online transport company is destroying their businesses, according to the Guardian’s website.

“Uber needs to jump through the same hoops as local taxi operators,” said Freedman, alleging that “Uber’s operations in South Africa are illegal – they are not complying with the National Land Transport Act.”

Alon Lits, general manager of Uber Sub-Saharan Africa, said in response: “Uber does not own ... any vehicles, but rather licenses technology to independent transport operators who can then connect with people wanting a ride. These partners are required to hold all the appropriate operating licences.”

“The main remedy we are seeking from the commission is to get Uber to change its behaviour and model in South Africa,” said Freedman.

If, in addition, the commission saw fit to fine Uber, then the applicants would welcome it, she added.

Taxi companies were finding it hard to compete with Uber because the pricing, especially for its low-cost UberX service, was unrealistic, she said.

Last month, Uber cut its standard fare to R6 per kilometre in Joburg, Durban and Cape Town for its UberX service in an effort to boost its volumes.

The fare cuts resulted in protests by some of the platform’s driver partners. “We do not have the commercial muscle and aggressive tactics of Uber,” said Freedman, adding that the SA Meter Taxi Association would be looking at other ways to legally challenge Uber in the future, but the submission to the commission was a “good start”.

“There have been protest marches staged against Uber by taxi drivers in Cape Town and Joburg, and a march took place in Durban on Thursday,” said Freedman.

“We are not against Uber’s technology. We will also be looking to implement technology into the industry.”

Itumeleng Lesofe, spokesperson for the Competition Commission, said the commission had received a complaint against Uber.

“This complaint was filed in November last year and is under investigation,” he added.

Lits said that competition authorities around the world had welcomed Uber’s impact. He quoted authorities in Poland, Germany and Mexico, which had all been positive about Uber’s benefit on competition in the transport market.

In Spain, Lits said, where Uber was previously banned from operating by a judge’s order, the national competition commission took government to court over restrictive private-hire regulations.

“Uber ... technology is fundamentally changing how people move around their cities,” said Lits.

Local taxi operators speak out

Local taxi companies are feeling the heat from Uber. Melusi Ncube, the CEO of Joburg-based Orange Cabs, said Uber’s entry into the local taxi market had had an effect.

Uber launched in Joburg in September 2013 and began operations in Cape Town the following month, later entering Durban and Port Elizabeth.

He said the biggest losers from Uber’s low fares would be the drivers.

“Uber’s low fares are going to result in the drivers spending less on maintaining their vehicles,” he added.

Uber’s Lits said that the company’s prices were lower because drivers using Uber were more efficient.

“Prices are low for consumers, while the money earned by drivers is maintained by maximising the amount of time they have a rider in the back seat,” he said.

Peter Lehman, the general manager of Durban-based Mozzie Cabs, said UberX’s base fare of R6/km, plus the 25% commission that Uber takes from its driver partners, made it unaffordable for drivers registered on Uber’s platform.

The company’s costs were lower than conventional taxi companies as Uber did not employ the drivers listed on its platform, and these drivers did not face the same compliance costs that conventional taxi companies bore.

Uber has never been transparent about whether it enforces compliance among its driver partners with South African transport and taxation laws.

“Tell me how Joe Public is protected when they drive with an Uber driver?” said Lehman.

Uber also had an expensive app, which conventional taxi companies could not afford.

“On every front, Uber is challenging and bullying legal taxi operators,” he said.

A manager at a Cape Town taxi service said that Uber was definitely gaining market share and his company was losing clients.

On the other hand, Ana Bonanni, the MD of vehicle finance company SA Taxi, said that Zebra Cabs, which SA Taxi owns, had as yet not seen an impact on its business from Uber.

Bonanni questioned whether Uber’s cheaper deal would result in a drop in quality amid rising costs for drivers, including a higher fuel price.

SA Taxi aims to boost taxi cab loan book to R600m

Taxi-finance company SA Taxi is looking to grow its loan book in the taxi sector 30-fold over the next four years, to R600 million, said Ana Bonanni, SA Taxi’s managing director.

This planned increase would add to the R6 billion loan book, which covers customers that SA Taxi has in the minibus sector, where the company started out 16 years ago.

Since its inception, the company has provided finance to 36 000 businesses.

SA Taxi entered the local taxi market last November with the acquisition of Joburg-based Zebra Cabs, followed by Quick Cab and Cabs for Women.

This year, SA Taxi is looking to launch the Zebra brand in Cape Town and Durban by acquiring local taxi operators in those cities.

When the company bought Zebra Cabs last year, Zebra had 41 employee drivers – and with the acquisition of the other two companies, the staff count has risen to 100 owner-drivers.

By 2020, Zebra Cabs plans to have 3 000 metered taxi drivers on its books.

This compares with the 4 000 active drivers Uber says it has registered.

Bonanni estimates that, countrywide, there are at least 17 000 taxi drivers.

She said the local taxi industry was not keeping pace with technology.

“The opportunity that Zebra Cabs sees is that the local taxi brands are fragmented and there is no single national taxi company,” said Bonanni.

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