Companies

Uber goes for the kill with 35pc fare cut

uber

Uber drivers in Nairobi. The firm has cut the pricing of short rides by Sh100 to Sh200. PHOTO | FILE

Summary

  • The new charges that are due to take effect on Thursday will see Uber charge its clients at the rate of Sh35 per kilometre down from Sh60.
  • Uber has also reduced its charges per minute by Sh1 to Sh3 and cut the pricing of short rides by Sh100 to Sh200.
  • The new rates come amidst growing competition in the taxi industry from local and foreign firms that have launched e-taxi hailing services.

Aggressive taxi hailing company, Uber, has slashed its charges in Nairobi by nearly half in response to mounting competition from local rivals that have entered the market this year.

The new charges that are due to take effect on Thursday will see Uber charge its clients at the rate of Sh35 per kilometre down from Sh60.

The taxi firm has also reduced its charges per minute by Sh1 to Sh3 and cut the pricing of short rides by Sh100 to Sh200. Base fare remains unchanged at Sh100.

Uber on Wednesday confirmed that it intended to make the new prices public Thursday, setting its rivals up for a pricing war. 

“We can confirm we will be making an announcement on Thursday that will positively impact driver-partners and riders across Nairobi. We are passionate about this city and we are looking forward to bringing even more benefits to the people who live here,” Uber Africa spokesperson Samantha Allenberg said.

The new rates come amidst growing competition in the taxi industry from local and foreign firms that have launched e-taxi hailing services.

The price war is expected to intensify as more players review prices downwards in a bid to hook more customers to their platforms.

Taxi-hailing apps launched after Uber have come with rates below the Uber rates, seeking to win some of the San-Francisco based company’s clients.

For instance, Dubai-based taxi-hailing app Mondo Ride officially launched in Kenya in January and has been charging Sh55 per kilometre and Sh4 per minute in addition to a base fare of Sh100.

READ: Mondo Ride undercuts Uber with lower Kenya driver fees

Safaricom–backed online taxi-hailing app Little Cab developed by local IT firm Craft Silicon, and which was unveiled early this month charges passengers Sh55 per kilometre and Sh4 per minute with no flat base charge or price surges during peak or heavy traffic jams as happens with Uber rides.

Little Cab was banking on its ‘fair’ pricing to woo customers – a move that now appears to have flown into strong headwinds with Uber’s decision to cut prices.

Mondo Ride also introduced a budget service last month where customers pay a lower rate of Sh48 per kilometre, Sh3 for every minute spent in transit and a base fee of Sh100.

Another app, Teke Taxi, launched a week ago has partnered with corporate cab companies and does not have a standard pricing schedule, meaning customers e-hailing a cab through the platform pay according to the tariffs of the cab firm picked by the app.

Uber’s move to review prices down is meant to make their services cheapest in the market and make its platform the most preferred by consumers in Nairobi.

Growing competition in the taxi industry has seen Uber stop signing new drivers on its platform and take time off new recruits to draw a plan on how to create demand for its service.

A notice sent out to partners says it has suspended registration of new vehicles and those wishing to sign-up will be placed on a waiting list.
According to the notice, it may take a while before the tech firm starts getting more vehicles on board.

“We have temporarily stopped on-boarding vehicles onto the platform. Please (register) to get your vehicle(s) in the queue. The vehicle waiting list timeline can range from three to greater than nine months and is dependent on Uber’s growth,” Uber said in a statement.

Ms Allenberg said that the firm had stemmed registration of new vehicle as a way of managing supply and demand.

The firm held a three-day meeting from Monday with its partner drivers to discuss ways of growing the app’s demand in Nairobi and to stop the dwindling requests for its service.

“Business is still good but not as high as early months after Uber entered Kenya. Now we have many other companies that are competing for the same customers and that has caused a dip in demand and earnings,” an Uber driver said.

Nairobi metropolis is estimated to have more than 10,000 taxicabs each doing an average of four trips daily, according to official data, valuing the capital city’s taxi business at Sh20 million a day.

This continues to whet the appetite of global and local players seeking to digitise the chaotic, but lucrative taxi industry.

Nairobi’s standing as an innovation centre has seen the entry of new players into the e-taxi hailing market since Uber’s arrival in Kenya last year. Other taxi-hailing apps available in the local market include Maramoja, Sendy Ride, Taxify and WayTaxi. 

The online taxi hailing apps have an attractive pricing model where every trip is automatically and openly costed, helping users to budget for their travel expenses unlike regular cab drivers who quote their prices based on arbitrary spot negotiations with clients.