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Uber, Bolt say price increases don’t make business sense

Sibahle Malinga
By Sibahle Malinga, ITWeb senior news journalist.
Johannesburg, 30 Aug 2022

E-hailing firms Uber and Bolt say they have already hiked their ride-hailing fees on multiple occasions this year, and have no plans for a further increase in the short-term.

Reacting to the outcome of last week’s mediation process between the two digital economy firms, e-hailing operators and drivers – facilitated by Gauteng MEC for transport Jacob Mamabolo – the firms say further fare increases will result in unsustainable business and hamper further growth.

This after the Gauteng e-Hailing Partners Council (GEPCO), which represents operators and drivers, told ITWeb yesterday their hopes were dashed after their demands were not met during last week’s mediation meetings with e-hailing industry stakeholders.

The mediation process was introduced following a series of previous engagements between the Gauteng Department of Roads and Transport, and affected parties, to find sustainable and amicable solutions to their challenges.

These include low wages, safety issues, rider fare structuring and the urgent need for regulation of the sector.

During the engagement, GEPCO urged the e-hailing firms to re-instate the initial pricing set-up, comprised of a base fare, plus minimum fare at 3km radius plus dispatch beyond 3km radius.They also want the fare amount to be charged per kilometre and per minute.

However, no agreement was reached in terms of the request to increase pricing and driver commissions.

Responding to ITWeb’s questions, Takura Malaba, country manager for Bolt SA, says the company increased its fares by up to 20% earlier this year, with increases implemented on the minimum fare, start rate, per kilometre rate and the trip cancellation rate.

“In the current socio-economic conditions, passengers carefully balance what is affordable and what is required, in our price-sensitive sector. The proposals put forward by GEPCO were extreme, with proposed increases of between 60% and 80%, and further higher increases elsewhere.

“Those increases in the price-sensitive market and the adverse socio-economic conditions are not sustainable and will result in immediate reduction in passenger use, which will mean far fewer opportunities for drivers to earn money,” explains Malaba.

Bolt says part of its mission to consistently identify ways to increase driver earnings includes incentivising passengers, launching new categories, establishing partnerships with other brands, and marketing the Bolt platform to attract passengers.

In a statement, Uber says it recognises the pressures drivers are under, including the increasing cost of living, noting that fares do fluctuate as a normal part of any business, based on various factors, such as seasonality and the macro-economic environment.

“We have implemented several fare increases this year alone, with the latest increase being announced this past July,” says Mpho Sebelebele, head of communications for Uber South Africa.

“It is important to note the current economic climate. Where price options are made too high, there could be a risk of fewer or no requests from riders – meaning fewer or no earning opportunities for drivers.”

High cost of running apps

GEPCO had requested that driver commissions be reduced to 10% and for booking fees to be charged as part of the service, not separately.

Bolt charges drivers 23% commission and a booking fee of 4%, while Uber charges drivers a 25% commission and a booking fee of 4%. Once again, there was no agreement reached during mediation.

“In SA, we have a standard service fee [driver commission] of 25%, which has not changed in the past six years. The cost of running the Uber app comes out of Uber’s service fee for each fare. The service fee helps us maintain and make continuous investments to enhance our technology,” notes Sebelebele.

“Through this service fee, we are also able to provide drivers with dedicated support, either at our Greenlight Hub or virtually. Additionally, Uber is able to offer extensive safety-dedicated features, including tactical emergency support in the event of an incident and Injury Protection Insurance through AIG.”

Uber and Bolt say they are always open for further engagement with their stakeholders.

The second phase of the mediation process – expected to focus on the rest of the issues – will take place in the last week of September.

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