Monday August 11, 2014
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Regional General Manager of Uber Technologies in Southeast Asia Michael Brown poses in front of the newly launched UberX range, on August 6, 2014. — Pix by Saw Siow FengRegional General Manager of Uber Technologies in Southeast Asia Michael Brown poses in front of the newly launched UberX range, on August 6, 2014. — Pix by Saw Siow FengKUALA LUMPUR, Aug 11 — One tap on your smartphone and in a couple of minutes your driver calls to confirm your location. Within 10 minutes (give or take a minute or so), an unmarked Audi pulls up in front of you and the driver gets out, acknowledges you by your name and opens the door for you.

Sounds like a good night out for a high roller, right? But one California startup company, to the dismay of taxi companies everywhere, is now offering KLites the opportunity to feel like a million bucks for far less.

Uber Technologies Inc, a venture-funded startup and transportation network company based in San Francisco, first connected riders here with luxury rental cars last October.

Uber, the Agoda or Expedia of ground transportation

Uber’s head of Asia Pacific (excluding China) Expansion Chan Park told Malay Mail Online that Uber connects “tens of thousands” of trips on average every month; he was a little coy about revealing a more precise number.Chan Park, Uber’s head of Asia Pacific (excluding China) Expansion.Chan Park, Uber’s head of Asia Pacific (excluding China) Expansion.

“Uber is kind of like the Agoda or Expedia of the ground transportation industry.

“We do not employ drivers or own cars or provide the transportation ourselves.

“We just provide sort of the middle-man tool that allows riders and drivers to connect,” he said during an interview last week.

Park said a year and a half ago, Uber only had presence in Singapore and now, it is in Malaysia, the Philippines, Thailand, Vietnam, Indonesia Japan, Korea, China, Taiwan, and six cities in India.

Fare comparison with taxis

A car under the UberBlack category, which includes the Audi A6, Mercedes E class, Toyota Camry, Alphard, and Nissan Teana, starts at RM3, the same as budget taxis. But for every kilometre, Uber charges RM1.15 while taxis, RM0.87. And for every minute, Uber charges an additional RM0.35 while for taxis, it is RM0.10 for every 21 seconds.

An executive metred taxi, which includes the blue taxis, in comparison, has a base fare of RM6, charges RM2 for every kilometre and RM0.20 for every 21 seconds.

There is also the 50 per cent surcharge after midnight for taxis, which Uber does not charge.

Park said Uber, with its tagline of “Everyone’s private driver”, essentially optimises the usage of luxury cars from car rental companies, which effectively brings down the fares.

“The limo industry or hire transportation industry is very seasonal and their utilisation is low, that’s the reason why they are so expensive.

“So when Uber comes into the market, it really allows them to smoothen out the seasonality, their utilisation, so that’s why we are able to bring down the prices so much because these guys feel a lot more comfortable going out there and logging on Uber because they know they are going to get demand,” he said.

But he noted that when Uber first came into the KL market, the drivers and companies were hesitant, and there were concerns if it was a “legitimate enterprise” and if they were going to make more money than they’re used to.

“In the beginning they have their clientele… maybe they have 20 hours out of the week that they are free, so they come out and do 20 hours. They come out on Uber and make some money and fill their excess capacity.

“Over time they get used to it, they start to like the service from their end, and then they start to do more and more and we have many drivers or partners who start to fully commit full-time on to Uber because it’s more efficient,” he said.

Stringent checks for drivers and car companies

Park said potential drivers have to go through a background check for criminal records as well as driving history.

They also have to maintain a “certain level of star ratings” from their riders. At the end of each trip, riders can rate the drivers as well as leave a comment about the driver or the overall experience.

“You can’t really understand how good a driver is just by interviewing him or sitting with him,” he said.

The potential drivers are also given a basic city knowledge test as well as knowledge on using a navigation system.

He also said since Uber’s partners are all licensed car companies, they would have met the required inspection or quality.

When asked how many drivers or companies are on Uber, Park declined to disclose the number. Malay Mail Online understands that its current partners include Extreme Limousine and Tours, Tropics Holidays, Trupco, Holiday Tours, Ahmad 5000 Tours and Chris Paul Transport and Tours.

“The number of drivers and cars doesn’t really matter as long as I’m getting you a car within a short period of time and as long as it’s reliable.

“Because I could have a thousand cars out there, if they are all working at three in the morning on a Wednesday, it doesn’t do me any good. It needs to match demands.

“We try to be as reliable as possible so when you open up that app, you are going to get a car,” he said.

The average pick-up time for an Uber car is between seven and 10 minutes, depending on the location and time, he added.

Drivers pay between 15 to 20 per cent to Uber for every transaction

A fee of 15 to 20 per cent, depending on the product and market, goes to Uber, Park explained.

“Our revenue is strictly those fees so when a rider books a fare on Uber, they are actually not paying Uber anything.

“That’s our revenue model, in some ways the drivers and the partners are our clients,” he said.

He said drivers use Uber as a way to find customers, as well as to process payments, generating receipts and access to other analytics tools.

He also pointed out that Uber passes the fares minus the fee to drivers and companies on Uber every week.

“That’s a big thing, when they have corporate relationships, sometimes account receivables can take up to a month, two months, whatever.

“They don’t have to worry about that because we make sure all the fares collected that week, we pass through to them, so they start to trust us a little bit, it’s a win win,” he said.

He also said although Uber would provide incentives to get the product going, it does not have a quota enforced.

A driver who used to drive the premier black taxis at KLIA said since working for his current company which partners up with Uber, he can keep 80 per cent of the fares, with no basic salary.

Compared to working for the taxi company before, he had to pay RM70 each day for the car rental and taxi permit, and what he makes in 24 hours with about two trips on average could barely cover his costs.

Another driver said he gets a basic salary and about 50 per cent of his fares. He said on average, he makes about RM900 a week, which he said was enough for a single guy like himself.

Although Uber does not keep track of the drivers’ profiles, a check by Malay Mail Online showed that while some are full-time drivers for the limousine companies, some do this for a side income.

“I actually have a business but I like driving, and this [Mercedes E class] is my dream car,” said one of the drivers.

Competition

Uber faces stiff competition from similar taxi-booking services such as MyTeksi, Easy Taxi and Taxi Monger, which has a network of 8,000 to 10,000 drivers in Malaysia.

TaxiMonger will have 1,200 metered taxis and 1,500 airport taxis by October this year.

In May, MyTeksi launched its GrabCar service offering cars such as Nissan Teana with a base fare of RM4.20 for off peak hours and RM6 for peak hours. It charges RM1.60 for every kilometre during off peak hours and RM2.30 for peak hours.

Unfazed by the competion, Park said as long as Uber excels in the areas important to riders, it wouldn’t need to worry.

“We focus on what we can control and what we can do.

“If we do what we’re supposed to be doing, we should be okay, so we focus on pick-up times, we focus on vehicle and driver quality, we focus on good customer support, fun promotions, staying relevant in the present, in the community, get local, so our team members here are all local folks who understand the local market.

“Those are the things I worry about. As for different kinds of options and choices customers might have, they should have choices, there should be alternatives…  if we are the best then we should win,” he said.

Easy Taxi regional manager for Asia Joon Chan however said it was unfair for Uber to come into the market here and offer rides which are sometimes cheaper than taxis.

“Taxis have a higher operating cost and now they are going up against such service with a lower operating cost and lower fees.

“You say you offer limousines, then why are you cheaper than taxis? This is called dumping, selling below cost,” he told Malay Mail Online.

Chan said taxi drivers are also complaining, calling it unfair for Uber’s new product to charge lower than the taxis.

“Taxis are taxis simply because they are screened by relevant authorities but also paying taxi fees so they can pick up up people on the street,” he said.

Uber partners up with the limousine companies which are also screened by the relevant government authorities as they are licenced to provide the services.

Focus on riders’ experience

The registration process would require a smartphone, your credit or debit card information, which unfortunately cannot be changed upon registration, an e-mail address and a phone number.

One of the perks is that each ride is a cashless transaction and your card will be charged at the end of each trip, and a receipt with the fare breakdown will also be emailed.

There is also an option to split fares among Uber riders as well as share the estimated time of arrival.

Riders are also be able to rate the driver out of a five star rating system as well as leave comments for improvements.

Each car also comes with bottled water, in case you get thirsty during your ride around town.

The downside, however, is that riders would not be able to place an order over a phone call.

Park said Uber is also accessible in about 170 cities in over 40 countries, as long as there is Internet connection, and the instructions would be in the rider’s language of choice.

UberX – the low cost option

Uber launched its low-cost range offering cars such as Myvi, Toyota Vios and Nissan Almera last week, with fares cheaper than metred taxis in the Klang Valley.

The base fare starts at RM1.50 and for every kilometre, it charges RM0.55 and RM0.20 for every minute.

Park said UberX would help the company provide the “cheapest option at each pricing point”, giving the example that a ride on UberLux, which is its premium range, would be cheaper than hiring a similar car and the driver, and the same goes for UberBlack and now UberX.

“We just feel if we’re going to fundamentally change the way people move around in KL or in any city we are operational in, we have to provide choice, different pricing points and UberX is a major step towards that goal in KL,” he said.

He pointed out that Malaysia is the first in Southeast Asia to have its UberX range, other than in Singapore because of how supply and demand are matching up here.

“We have seen such stable growth over the last few months and how it’s spread throughout the community.

“We just felt the next step for the business is not only to play this premium, luxury demographic but we want to open up to the masses.

“If anything, by opening it up to the masses, opening up UberX means people who weren’t going to sign up for UberBlack are now signing up and occasionally they would use UberBlack because they have date nights too right?” he said.

Expansion

He added that Uber is actively recruiting drivers and companies in line with its plans to expand to other cities in Malaysia.

“In fact over the next couple months, you’ll see us opening up in more cities than just the Klang Valley.

“We want to be in as many different locales in Malaysia as possible because the growth that we are seeing in Malaysia is very promising,” he said, keeping a tight lip on a timeline, and the cities in its pipeline.

One of the drivers, however, told Malay Mail Online that Uber would be expanding to Penang and Johor Baru.

Park also said the fares would be indexed to “what makes sense” for the individual cities.

It looks like more Malaysians can get more bang for their buck when it comes to rides.

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