UBER’S LONDON RIVALS CIRCLE AS THE COMPANY FACES ITS JUDGEMENT DAY
Coronavirus has been brutal for ride-hailing compa- nies. At the height of
the crisis,
demand for rides on Uber dropped by 80 per cent and revenue fell by 29 per cent year-on- year to $2.2bn. The company cut 3,700 staff during the pandemic. Uber chief execu- tive Dara Khos- rowshahi admitted that the food deliv- ery side of the business, which brought in more revenue than rides during the coron- avirus crisis as the bottom dropped out of that market, will help the com- pany to navigate the challenges ahead. “While we would have all hoped that by now we would have a clear line of sight to the end of the pandemic, hope is not a strategy,” he said. “The bottom line is we have taken swift action on everything that’s within our control.” As Uber battles to stem losses, its future in the UK has never been more out of its control. On September 14 it will finally face TfL in court to fight the revocation of its London licence over passenger safety concerns, after a July court date was delayed due to coronavirus. That same month, it will likely receive a Supreme Court judgment that will determine whether its drivers can con- tinue to be classed as contractors or
48
whether they are workers, entitled to basic benefits such as holiday pay, min- imum wage and sick leave. These are costs that Uber can ill afford – even before the coron- avirus crisis. If it wins both legal battles, it could yet end speculation about its future in London and avoid prolonged court battles against a major
transport
regulator. If the Supreme Court case is dismissed, it could also stop drivers bringing future claims ag- ainst the company. The future of the union that repre- sents them, the App Drivers and Couriers Union, is conditioned on the majority of its members being classed as “work- ers”. If Uber wins, the union has been warned that its sta- tus might be revoked. But if Uber loses either case in court it could be a disas- ter for its oper- ations as it at- tempts to recover from the crisis. If it loses both, it could be the beginning of the end of Uber in the UK. Uber’s new plan to take over tech com- pany Autocab, which connects people to taxis in areas where Uber doesn’t currently operate, could let it reach thousands in places such as Oxford and North- ampton for the first time - but would hardly make up for the revenue loss of
London. For a long time, major rivals have dreamed of knock- ing Uber off the top spot in the UK’s capital city. That moment may have finally arrived. And as Uber’s legal dates loom and p o s t - l o c kd own rides ramp up again, major rivals have been forging partnerships and finalising mergers to jostle for a chance to take over. Private hire app Free Now recently completed its mer- ger with Kapten, a move that it says makes it the second largest operator in London. Post-lockdown re- covery has been a lot faster for Free Now than the com- petition, Mariusz Zabrocki, UK gener- al manager, claims, after the company was hit by 60 to 95 per cent drops in ride hailing volumes across its markets in April. But Free Now has regained ground in June and July, reaching prof- itability in most of the markets where it operates, includ- ing the UK and Europe. Zabrocki points to black cabs, offered as an option on its app
alongside PHVs. SoftBank-backed Ola, which launched in London in Febru- ary 2020, also partnered with taxi- hailing company Gett, an aggregator which provides cor- porate clients with rides
through
established taxi operators. Ola, which was forced to cut 35 per cent of its workforce dur- ing the crisis, can tap into demand from Gett’s clients to make up for any shortfall in con- sumer demand. Gett and Ola say they have seen an increase in corpo- rate demand in recent weeks fol- lowing the easing of lockdown restric- tions across Lon- don. “Our aspiration continues to be as it has been since day one – to become the market leader in the UK by offering a differentiated ser- vice focused on quality and safety,” says Marc Rozendal, Ola’s UK MD. He points to the com- pany’s £50 million investment in safety initiatives, as well as the Gett partner- ship, as commit- ment to growth in the country - and protection against
another surge in coronavirus cases. Gett, which is not competing directly against Uber or other ride-hailing companies in the UK, could hand Ola an important strate- gic advantage with a client list that includes a third of Fortune 500 com- panies, in the same way that its strate- gic partnership helped Lyft in the US. Gett chose Ola as a partner not just for its UK market, but others, such as India and Australia, where its clients also have opera- tions, said Dave Waiser, Gett CEO. None of them believe that Uber’s employment case will have knock-on effects for the wider ride-hailing market. They argue that they offer far more flexibility for drivers to use any app they want at any time which means that they are clearly con- tractors. Ironically, this is also Uber’s argument. One of the biggest selling points for Free Now and Gett since coronavirus will likely be black cabs, which Steve McNamara, general secretary of the LTDA, says are best prepared to deal with coronavirus. Newer models have separate clean air filtration systems for passengers and drivers along with the usual hard plas- tic separation panel. And all cabs are designed to avoid spreading bodily fluids, he says.
As more traffic con- trol roadblocks are set up in London, black cabs will be a much faster alter- native to minicabs, because they are allowed down streets only open to bikes and buses, as well as bus lanes. McNamara isn’t thrilled by the pros- pect of ride-hailing companies cashing in on these advan- tages. He says Free Now has become “persona non grata in the taxi trade” after the merger with Kapten, be- cause black cabs refuse to compete directly with mini- cab drivers. Gett has so far escaped a similar backlash. Instead, cabbies are trying to compete with their own offerings, in-cluding Sherbet, Taxi App and cab:app. But, as a result of the pandemic, Lon- don’s fragmented and divisive taxi and PHV market runs the risk of crumbling apart. As Uber and its rivals share drivers, they have engaged in price wars as their only way to gain market share - a wholly unsustain- able strategy in the face of a potential spike in coronavirus cases. The game has funda- mentally changed. At the end of this crisis, the winner won’t be the one with the most mar- ket share, it will be the one left stand- ing.
Article by: Natasha Bernal for Wired
SEPTEMBER 2020
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