Uber Israel rides again

Uber  credit: PR/Yossi Zeliger
Uber credit: PR/Yossi Zeliger

After a failed attempt to enter the Israeli market in 2017, Uber now seeks to coopt those who opposed it - the taxi drivers.

US-based ride-sharing app Uber is trying its luck in Israel a second time, after its first attempt, which began seven years ago, ended in failure. Opposition by taxi drivers and their union, and by then minister of transport Israel Katz, was decisive, and the UberX app, which enables any car driver to take paying passengers, was banished from Israel. Earlier this year, Uber’s veteran regional general manager Yoni Greifman was replaced by Gony Noy, who returned to Israel to run the company’s local activity, with the remit of linking up with licensed taxi drivers.

This is part of a new strategy adopted by Uber in the past few years, of serving the group that opposed its establishment - the taxi drivers. The company has recently signed up more than 150,000 licensed taxi drivers around the world.

Gett and Yango raise drivers’ commissions

In Israel, since July, Uber has sought to exploit the recovery from the Covid-19 pandemic and the return to routine among two main groups: tourists, and Israelis who frequently travel overseas. These two groups are in any case accustomed to using Uber’s app, and there is no need to persuade them to download it. Uber’s big challenge was, as always, recruiting passengers. As far as taxi drivers are concerned, the hike in commissions by rivals Gett and Yango plays into its hands.

Whereas Gett has raised its main track, for full-time drivers with national coverage, from NIS 1,500 to NIS 1,700 monthly before VAT, and from NIS 99 to NIS 149 for its cheapest track, while Yango has raised the commission it charges drivers to 8%, Uber is launching with a commission rate for new drivers of 3-8%, depending on the ride. The lower commissions are for drivers who provide better service to passengers, taking more trips at peak hours and receiving high passenger ratings. Uber is advertising on driver Facebook groups and holding recruiting events at which it is offering "friends bring friends" awards of NIS 720 - NIS 360 for the driver who does the recruiting and NIS 360 for the driver who joins - and discounts on repairs at certain garages.

Like Yango, Uber is struggling with the challenge of making drivers operate their meters. The app presents the passenger with an estimated price range, and obliges the driver to operate the meter. The passenger thus does not know with certainty in advance how much he will pay, which he does with Yango, but on the other hand he does receive an estimated range, unlike with Gett. Since Uber’s drivers are concentrated around Tel Aviv’s Ben Gurion Airport, the incentive to operate the meter on intercity journeys is already low, because of the maximum fares set by the Ministry of Transport for such journeys.

Uber is also promoting its shared taxi service, Uber Share, enabling meters to divide a journey among several passengers who will split the fare between them. The company is basing this service on transport regulations from 2017 permitting shared taxi rides with an automatic 20% discount on the metered fare. This provision has made such journeys not worthwhile for many drivers, who have not adopted the scheme, fearing that passengers will take advantage of it to travel at a discount after other participants cancel their reservations. Uber now seeks to cancel the discount for single trips, and is working vis-à-vis the Ministry of Transport on the matter.

Published by Globes, Israel business news - en.globes.co.il - on September 21, 2022.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.

Uber  credit: PR/Yossi Zeliger
Uber credit: PR/Yossi Zeliger
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