Uber banks on successful Singapore game plan to win over combative Hong Kong cabbies as partners
Uber is banking on its new UberFlash service – that matches users with either taxis or private cars – to win over disgruntled Hong Kong taxi drivers, as it continues an uphill battle to make headway in a market where ride-sharing is illegal.
Hopes at the US-based firm are high that the new matching service, that has taken off in Singapore and Bangkok and upped cabbies’ takings in the former, will pacify local taxi firms who see Uber’s ride-hailing system as anathema to their livelihood.
Senior Uber executives revealed the plan to the Post at the firm’s San Francisco headquarters recently.
There, the company’s chief operating officer Barney Harford stressed its focus on improving relationships with different stakeholders and governments across the markets it was in, in line with new CEO Dara Khosrowshahi’s efforts, since taking over last August, to be more conciliatory and bring to an end the clashes Uber previously had with regulators.
Harford said Uber would make sure it was “abiding by the laws”, adding: “It’s about growth the right way and making the right position and trade-offs with those cities.”
Uber has struggled to get a break in Hong Kong, whose population of over 7 million is served by 18,000 licensed taxis and about 40,000 drivers.
Taxi operators have to pay HK$7 million (US$892,000) for each licence and they have vehemently opposed suggestions that the government ease its current 1,500 private car-rental permit scheme so that more ride-hailing vehicles can be on the road legally.
On the other hand, sharing economy advocates have slammed officials in the city for protecting vested interests, instead of embracing new technology and giving consumers more choice.
Meanwhile, about 30,000 drivers are registered with Uber in Hong Kong and they risk being prosecuted for offences such as driving without a permit and third-party insurance. Five Uber drivers were convicted last March while in December, another 23 drivers were charged with carrying passengers for reward.
Damian Kassabgi, Uber’s director of public policy for economics and research, was confident of UberFlash’s attractiveness to Hong Kong’s taxi industry, saying it was a good example of how taxis and Uber could coexist.
“We are actively looking at Hong Kong to understand the taxi market and taxi companies. We’ll be willing to partner with taxi companies in Hong Kong. This is something that we are actively doing at the moment,” he said.
The service, as rolled out in Singapore with taxi giant ComfortDelgro, works like this: Riders key in their destination and are offered various options, including UberFlash, which would secure a taxi or private-hire vehicle depending on which is available more quickly.
The price of the trip is stated upfront but commuters would see higher fares when demand goes up, even though taxi fares are usually based on distance.
Kassabgi said since UberFlash began in January, the firm’s internal data showed average earnings of active ComfortDelgro cabbies using UberFlash increased by 19 per cent, with take-home earnings of over S$2,200 (HK$13,151) per week. But he did not say how many drivers earned this amount.
ComfortDelgro has 13,695 taxis while Uber has about 14,000 vehicles that it rents to drivers.
While Hong Kong taxi firms were initially sceptical, now they were positive, he added.
“When they see the example of Singapore, they realise that we are serious about it … they are now willing to understand [the new service] more in-depth.
“The proof is in the pudding. This is a successful partnership. They [the cabbies] are getting more work. The compromise here is not necessarily one,” he said.
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Uber Hong Kong’s general manager Kenneth She Chun-chi was also upbeat and hoped taxi companies would stop viewing Uber as a rival.
“We are still studying how to introduce UberFlash to Hong Kong, such as the regulations, and pricing. As long as there are taxi groups willing to join us, we can make it happen. We can start from a small scale,” he said, pointing out that under local law, taxis could in some cases not use the meter and agree on a fixed price with riders.
As to whether Uber would give up its ride-sharing business with private car owners, the bane of cabbies, She said both business models could coexist.
“I hope the taxi industry understands that the two models are not mutually exclusive … our ride-sharing platform has not affected their business,” he argued.
But a check with two players found that their resistance to Uber remained.
The Association of Taxi Industry Development’s chairman Chan Man-keung said his group was open to cooperating with Uber but maintained that it needed to ditch its ride-sharing service.
“Actually we really appreciate Uber’s app system and in fact we are studying our own app system in the hope of countering Uber. However, we can’t accept something illegal.
“Our stance is that if it wants to have some kinds of cooperation with us it needs to give up its illegal ride-sharing business. This is our bottom line,” he said.
Sonia Cheng Man-yee, director of SynCab, which runs a fleet of 118 premium taxis, said she doubted whether UberFlash could increase the income of cabbies.
But if the terms and conditions could generate more income for SynCab drivers she was willing to consider it.
“Of course Uber should give up its illegal business first before we can discuss this further,” she said.
Cannix Yau was reporting from San Francisco
This article Uber banks on successful Singapore game plan to win over combative Hong Kong cabbies as partners first appeared on South China Morning Post