How to deal with the Uber challenge

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Demand for Uber has been surging in places such as Johannesburg. (Gareth van Zyl)
Demand for Uber has been surging in places such as Johannesburg. (Gareth van Zyl)

Leipzig –  The entry and rapid growth of so-called app-based commercial transport models have not only lead to conflicts with existing traditional modes of taxi services, but also raise questions about the regulation thereof.

Uber, for instance, has recently registered its billionth ride.

“The transport industry is and will be changing very fast and companies who want to survive as well as countries who would like to address the issues constructively, would have to find applicable policy solutions,” said Jose Viegas, secretary general of the International Transport Forum (ITF) at the opening of its global summit on Wednesday.

“The ITF hopes the report will be an inspiration for countries to use in their approach to regulating the relevant sectors.”

Research completed by the ITF on the issue has found that commercial transport apps are popular, because they provide easy, consistent and universally available services for those able to access them.

Ride-hailing apps are popular, for instance, because they often provide better consumer value than most existing services, it was found.

For consumers there is little difference in the transport service provided by taxis and commercial transport apps (CTAs) as long as the trip is carried out in a satisfactory and timely manner, the ITF research has found.

These kinds of apps, it was found, also provide more transparency, certainty and accountability than traditional street-hailing or radio-dispatched services. The apps further improve the allocation of available capacity, which is regarded as being beneficial to consumers, operators, cities and the environment.

The apps-model also provide flexible work opportunities for drivers, thus adding value for them. App-based platforms, furthermore, change mobility in the transport industry in that they reduce transaction costs and improve the allocation of resources

The report found that traditional taxi operators are, in any event, increasingly using transport apps.

This is starting to make the regulatory distinction between app-based platforms and taxis less relevant, the research found. At the same time, it found that street hailing taxi models still warrant special regulatory treatment.

“Overall, there is convergence among services provided by taxis, private-hire vehicles and CTAs as they increasingly adopt similar technology,” the report states.

“Regulation of for-hire passenger transport, therefore, is still necessary, but it needs to adapt. Rules governing market entry, geographic restrictions and fare setting for taxis are neither in line with the reality of mobility demand in many cities, nor are they adapted to the types of services provided by the CTAs.”

The report emphasised that CTAs are not taxis, but, increasingly, neither are taxis – “at least in the traditional and historic sense’’.

The report recommends that the regulation framework for the hire-passenger transport services should be kept as simple and uniform as possible. It also suggests that regulation should be innovative and more flexible and that a data-led approach will improve the benefits from a societal point of view.

The report further suggests that regulations should be limited to correcting market failures, rely on the most efficient tools, be technology neutral and not discriminate between operators in the market. The relevance of regulation should also be monitored and re-assessed.

“Regulation should be adaptable, clear and easy to apply, based on sound economic principles and be inclusive of all social groups,” the report emphasises.

Lastly, it recommends that regulators must ensure public safety, protection of consumers and drivers, as well as tax compliance.

“Policy should seek to integrate taxi, CTA and micro-transit services into the broader offer of mobility services, including public transport and car- and bike-sharing. It should also include consolidation of modes in trip planning apps and the unification of fare payment,” the report concludes.

 - Fin24 is a guest of the International Transport Forum at its global summit in Leipzig.

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