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January 2018

The plot thickens as Lyft and other app services hit the streets

by Mike Beggs

The Uber-Lyft war has been heating up in the U.S. over the past year -- and it’s now officially underway in Toronto.

On December 12, Lyft cars hit the streets with Blues Jays’ pitcher Marcus Stroman taking the first ceremonial ride, in a fundraising effort for Toronto Sick Kids Hospital.

This marks Lyft’s first step towards expansion outside of the U.S. -- with co-founder and CEO John Zimmer recently voicing his long-term ambitions of being the number one ridesharing company in the world.

Aiming to build market share from Hamilton to Oshawa, and as far north as Newmarket, Lyft can now – just like Uber -- put an unlimited number of vehicles on the road.

“They’re going to grab a market share. They’ve got a business model which is reportedly more friendly, specifically more driver-friendly, and they will pull away some Uber drivers, and some cab drivers,” observes Mississauga plate owner Peter Pellier. “How large, who knows?

“They will be a player, and that will add hundreds, or thousands of cars to the number of cars in the market. It’s going to be staggering. I just don’t see how all the players involved can make a go of it.”

Beck Taxi owner Gail Souter told CP 24, “adding thousands of extra cars to Toronto streets is the last thing we need.”

Best-Tech Taxi owner Baljit Sikand is among those to suggest that, for now, “Lyft will be eating out of Uber’s customer base.”

“But they seem to have better values than Uber,” he says. “If that is the case, they might be getting corporate accounts.”

Ambassador driver Rudy Valverde feels Lyft will be going after the same business Uber trades in.

“I believe Uber drivers are going to shift to Lyft, because it is going to charge them less money,” he offers.

“And I think Uber is just the tip of the iceberg – or the Uber-like business model -- because the kids are into that stuff. They love it. They’re using Uber for food delivery. The cab industry already has apps – Beck, Co-op-Crown – but they’re playing catch-up to Uber.”

For all of the controversy surrounding Uber, many industry figures acknowledge ridesharing apps are the method most consumers want to book a ride.

“To be honest, the way it’s going is to technology, and only the elderly people will stay with the taxi industry,” says a driver named Elias.

“In my opinion, people love what they’re offering -- so the taxi industry has to catch up on that.”

Sikand agrees, “Young people simply don’t want to get a phone call from somebody, they want an e-mail, or a text message.”

And in recognition of this trend, he has obtained a Transportation Network Company (TNC) license, and is presently “working out the little bugs” in his own app-based service, RideIn, featuring 70 or 80 luxury cars.

“It will by my own TNC company, not like Uber X, like Uber Black, but where Uber Black would be charging $100 to get you downtown, ours will be $55 -- better rates, no surge pricing, later model cars, and experienced drivers,” he relates.

“I hope people will know (about us) in January. I’m working with my data people to do proper marketing.”

Lyft is reportedly also eyeing the Ottawa market, a year after Uber became licensed there. Bylaw manager Roger Chapman confirmed in mid-November that city officials met with Lyft executives to discuss licensing the company, and expects it to submit a formal application soon – after which its cars could be on the road within a week.

Meanwhile, the Toronto-based InstaRyde kicked off service on December 1, promising cheaper rates, surge-free pricing, and higher driver income.

In a press release, InstaRyde marketing manager Naveed Manzook stated, “We have taken the time to listen to drivers and riders in our city and have developed InstaRyde as the answer.”

New drivers receive a bonus of $300 for completing 50 rides in 30 days, and $100 for each driver referral. InstaRyde will take a flat rate of just 99 cents per trip from the driver, while passengers will be offered such incentives as free water and gifts.

For December, they donated 25 percent of each ride to a local charity.

CEO and co-founder Karim Sumar says they first developed InstaRyde in 2008 as a remedy to Toronto’s gridlock, and feels they can create “custom solutions for Toronto”. He wants to offer a Canadian option to the popular ridesharing companies, and, “take Toronto innovation and technology to the next level.”

Meanwhile, another company, Facedrive Inc. hit Toronto streets on October 30. Its app calculates the estimated Co2 emissions of each ride, and then donates an equivalent sum of money to Toronto Parks and Tree Foundation.

iTaxi Associations director Mohammed “Reza” Hosseinioun suggests the PTC count could quickly hit 10 or 12, just as it is with taxi brokerages.

“Of course, when these companies look at the City of Toronto as open game for them, they figure ‘We can do whatever we want.’ Why not?” he says. “They can base themselves here, and move to other cities. All over the world the Mayor has been regarded as (ridesharing-friendly).”

But he suggests the PTC’s, “don’t have anything special”, mostly just a cheaper price than the taxi industry.

“They can buy any car they want, and all these other things. But if they (hike) their price, you will see no one will get into an Uber, or Lyft car. The element here is the price.”

“(And) this is basically from the pockets of their poor drivers. They don’t even make minimum wage.”

Hamilton owner/operator Hans Wienhold observes that once the competition comes in, “What has Uber got anyone else can’t replicate? There will be plenty of other businesses like Uber.”

“I think the percentage they take from the drivers will be driven down by the competition. I don’t think it will be any different from the interest on credit cards -- two or three percent. It’s the driver who is doing all the work,” he continues.

Right off the bat, he suggests the business is going to be split largely between Uber and Lyft, with whatever residual business left to cabs. He foresees many drivers using both the Uber and Lyft app, noting there’s even a special app available (named “Maestro”), which, “sits on top of those two, and coordinates them.”

A1 Airlines taxi driver Hari Sharma complains that while people in the cab industry have been following the rules all these years, “It kind of looks like with Uber and Lyft coming in, (the municipalities) are rewriting all of the bylaw for them.”

He, like many, sees customer safety as a concern with TNC’s, stressing, “We have to go through a lot of training to get a license, including CPR .”

Surge pricing is another point of contention.

“I think it’s uncalled for, especially for customers who are basically stranded,” he comments.

“At the airport we are all flat rates. Tory said we can charge more in peak periods, but we won’t do it because it’s just unethical to do that. It’s not the customer’s fault, because of the weather.”

Of Lyft’s arrival, Oakville owner/operator Al Prior suggests, “it will cheapen our industry”. He stresses there’s a fixed overhead to operate a car, and estimates that each driver must do a volume of $50,000 to $60,000 in revenues just to pay themselves $15,000 to $20,000 a year.

“People think you drive somebody somewhere, and it’s all profit. But it’s not,” he says.

He observes “there’s no way” the GTA needs the huge number of cars that are coming on the road – with Uber X, Lyft, and other TNC’s utilizing many part-time drivers, and newcomers to the industry.

“I definitely think it will have an impact in the short term, and long term. It drives the professional people out of the business,” he says. “I’ve been working here since 1974. I consider this to be a professional job, and for some reason the public refuses to see it that way.”

 

© 2018 Taxi News

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