Infighting, politics in cab unions may throw HDK Cabs, Taxi for Ride app launch plans out of gear.
Taxi-aggregator apps launched by drivers’ unions to counter Ola and Uber in India sound like socialist utopia — by the drivers, for the drivers etc. But what is their long-term strategy to beat global giant Uber, or the local market leader Ola, with their deep, investor-funded pockets and global technology expertise? There isn’t much clarity on that. In fact, the union-backed apps seem to be basing their strategy on the assumption that local drivers will leave Ola/Uber service in droves in favour of the homegrown services, but this model hasn’t been tested in any market so far.
Protests by disgruntled Uber and Ola drivers in Delhi, Bengaluru and other cities over the past few months against “unfair practices” — reduced earnings, slashed incentives and bad working conditions — by cab aggregators have spawned a couple of new ride hailing apps with the aim of “protecting the interests of the drivers.”
One of them is HDK Cabs, a not-for-profit ride hailing app in which former Karnataka chief minister and JD(U) leader HD Kumaraswamy is making an initial investment (he made the announcement on Saturday). According to this Economic Times report, Kumaraswamy said he would make an initial investment of Rs two-three crore and may invest up to Rs 50 crore over the next two years. He is supported by Tanveer Pasha, president of Uber, TaxiForSure and Ola (UTO) Drivers and Owners Association.
Kumaraswamy-Pasha are playing the driver “injustice” card while exhorting them to join HDK
When Kumarswamy on March 1 urged drivers to start their own cab aggregation app, he set off the spark of potential entrepreneurship, and a handful of leaders with different cab unions started harbouring ambitions of leading such an initiative.
Kiran Gowda was one such cab union leader who started developing an app — Taxi for Ride. He has roped in his friends to develop the app, which has features similar to Ola and Uber, and has joined them as cofounder of the company. He also has the support of drivers who’ve broken away from the Kumaraswamy-Pasha camp.
The union leader reportedly approached Kumarswamy to invest in the app, but the politician and other union leaders “did not entertain him” as Taxi for Ride is aimed at “making profit and not at serving drivers.” In fact, he was expelled from his union.
“Gowda had promised the app developers he would connect them with Kumar anna. But these guys want to make profits and are not concerned about drivers’ interests. So, leaders of all other cab unions in the state decided to turn him down,” said Pasha.
Kiran Gowda reportedly approached Kumarswamy to invest in the app, but the politician and other union leaders “did not entertain him”
This scepticism may very well turn out to the advantage of Taxi for Ride. The expelled union leader said he doesn’t need the support of a political party to launch the ride hailing app
He has decided to go ahead with building the app along with his developer friends and has joined their company as a co-founder. He is looking to raise funds to build a fully operational app. “We are not worried about HDK cabs. We are looking for investors who can help us build a good product and not bring in politics. As per my estimate, it will cost us about Rs 80 lakh in the next three to five months,” said the expelled leader.
The first prototype of the Taxi for Ride app is ready, he said, adding that the app is focused on ensuring the security of both drivers and passengers. The team is contemplating installing cameras in cabs. Tygrapp, a Kolkata-based multi-mode transport app platform had approached Taxi for Ride and wants to invest in the platform.
These developments add a new dimension to Ola and Uber’s high-pitched battle for the $10 billion cab aggregation market in India. The stakes are high with both companies having pumped in hundreds of millions of dollars. Uber has committed over $1.5 billion in India in the next few years. Ola, which is backed by most one of the most cash-rich venture capital firms in world — Softbank — has already invested $1.56 billion in nine rounds from 20 investors.
Kumaraswamy-Pasha are playing the driver “injustice” card while exhorting them to join HDK. “The companies and the government have failed the drivers. In the interest of the drivers, I have decided to extend all cooperation to introduce a new app-based platform by Ugadi which will be run by the drivers themselves,” Kumaraswamy had said earlier.
As many as 13 drivers’ unions in the city reportedly came together to form a core committee to enlist drivers on the new platform and nearly 40,000 drivers were keen to join the new company.
Pasha had told the media that their focus would be service and driver interests. “All drivers will exit from Uber and Ola platforms and join our network… We will ensure that drivers are not harassed and unrealistic targets for incentives are not set,” Pasha had said.
But, if the new apps want to take on the likes of Ola and Uber, they will need clear differentiators. From the looks of it, HDK’s business model is quite different from that of these cab aggregators. The company is planning a flat fare structure with no surge pricing and no incentives for drivers, on the lines of a traditional cab aggregator, and completely contradictory to the Ola / Uber model.
HDK plans to take just 5% commission, compared to the 25-30% taken by Uber and Ola, and the company says its not looking to make profits, unlike the market leaders. The commission will be used to run the backend team and any profits will be deposited in a driver welfare scheme.
HDK plans to take just 5% commission, compared to the 25-30% taken by Uber and Ola, and the company says its not looking to make profits
Whether or not HDK and Taxi for Ride can become direct competitors of Uber / Ola in terms of their business models and pricing, if a large number of drivers leave these platforms to join either of the local apps, the former will be left high and dry