Hail this: A local Uber competitor plans to disrupt its stranglehold. Picture: Facebook
Johannesburg - A prospective local competitor to Uber, co-owned by metered taxi companies, says it can match the e-hailing giant’s fares – even while claiming that these are unsustainable.
YooKoo Rides aims to launch an e-hailing taxi app for Android and Apple devices at the end of this month, and progressively draw a large part of the beleaguered metered taxi industry back into the fold.
Ultimately, it will be a “national project”, said Kenny Niemach, the chief operating officer of YooKoo, and former Mamelodi Sundowns and Kaizer Chief star.
For now, it is a joint venture between the small tech company and a group of Gauteng-based taxi companies.
Niemach declined to commit to a fare rate for the new service.
“We have looked at it very carefully and we will compete with the price Uber offers. There will be no disparity. Trust me, you will see it when we launch it,” he told City Press.
Despite this, he said Uber’s current rates were inherently unsustainable.
Metered taxis charge about R10/km, while Uber charges about R7/km.
“The Uber rate is not sustainable. No way the price can stay where it is. No way,” said Niemach.
He suggested that the metered taxi associations, armed with an app of their own, need to restore government regulation of the number of taxis operating in a given area.
“That is why they [Uber] disrupted the market. It is an industry that is supposed to be controlled and under the auspices of government. It needs to be regulated in the sense of how many cars you have in a certain radius,” Niemach said.
“There are too many of them.”
YooKoo intends to go to court after it is launched to prove the “illegality” of other e-hailing apps, he said.
The issue revolves around the operating licences issued to metered taxi drivers under the National Land Transport Act.
As things stand, these licences are meant to ration the number of taxis in an area.
Uber drivers are supposed to get licences, but YooKoo claims they don’t.
Uber denies this and has made applying for the same license one of the requirements for drivers, alongside roadworthiness certificates and commercial insurance.
An Uber spokesperson said: “However, the process of operating licences has been delayed as there is a backlog with the relevant departments. The frustration with bottlenecks are felt by everyone in the industry – not just with the Uber driver-partners and, sadly, there has been no clarity on this issue.”
Niemach said that YooKoo drivers would all have the licences, which would make YooKoo “the only legal entity [among the e-hailing apps]”.
“They must comply, and that changes the entire landscape. We have been dealing with top lawyers on this,” he said.
A legal amendment to accommodate e-hailing has been in the works in Parliament since early last year. The most recent version would subsume e-hailing under metered taxis and retain the kind of regulations YooKoo believes gives it the advantage.
YooKoo will provide the app. The company that will operate the taxi service is the GMTC Taxi Rides Company. The acronym refers to the Gauteng Metered Taxi Council.
Drivers are to be enticed into joining with the prospect of ceding less of their fares than they would under competing apps.
“Drivers will get a better deal. You are not going to be paying 25% – that is the first thing,” said Niemach.
According to Reuben Mzayiya, one of the four directors of the GMTC Taxi Rides Company, the new organisation will charge drivers 15% of their fares.
Of this, 10% would go to YooKoo and 5% to the company the driver belonged to, he said.
Uber’s low fares are not the only way it has been winning the market.
One of its defining traits is the requirement that Uber cars be relatively new – no more than four or five years old.
In contrast, the metered taxi industry is infamous for the large number of ancient and dilapidated vehicles on the road.
Niemach said that thorough recapitalisation was needed over a number of years to flush out the rust buckets.
For now, YooKoo is going ahead with only the best cars available in the fleets of the participating taxi companies, he said.
“You will see the cars that will be used in the launch are the very best of what they currently have. Not one is older than five,” said Niemach.
“It defeats the purpose if the car is old and dilapidated. The service has to be comparable, if not better. We have 200 on the system already, largely in Johannesburg.”
YooKoo claims it can eventually build a fleet of 180 000 cars, which is multiples of some estimates of the size of the market.
Transaction Capital, the group behind Zebra Cabs, estimated the entire supply of metered taxis at a little more than 20 000.
SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.
Read Fin24's top stories trending on Twitter: