The rise of the pocket riders: how technology is changing the transportation industry

There’s been an explosion of transport apps in the New Zealand market in the last 18 months, and many in the industry are saying the time for traditional taxi companies to get on board is now, before they find themselves on a long journey into oblivion with the meter running.

While Uber has been in the media plenty for its globally rampant service, pairing drivers with customers via a smartphone app, it’s not the only model to try and crack New Zealand.

Currently Auckland has the most choice of them all, with Uber, Zoomy, the Co-op Taxis app, CityHop and Cabchooze, and each service is slightly different in its offering.

For the uninitiated, Uber is an app that hooks you up with registered drivers at the push of a button. It features GPS tracking, a driver/client rating tool, and all fares are pre-agreed and paid for in-app. Uber New Zealand general manager Oscar Peppitt says since launching in Auckland five months ago they’ve seen rapid uptake and, while it won’t release specific numbers, he says tens of thousands of customers have used the app since then.

Part of its success is because New Zealand has an extremely expensive taxi market that they have been able to provide a cost-effective alternative to, Peppitt says.

Uber has launched in 204 cities in 45 countries around the world, and it’s faced challenges from regulators and established taxi operators in some of them, but Peppitt says New Zealand is “one of the more progressive markets in the world when it comes to transportation regulation”.

“New Zealand is one of the few deregulated transport markets in the world. Drivers are independent operators running their own business, and contracting to taxi companies and booking services. It’s one of the reasons why Uber’s growth has been so great in this market.”

Uber’s current offering in New Zealand is legally covered under our private car hire service laws. The drivers are all required to hold passenger endorsements on their drivers’ licenses, sit ‘fit and proper person’ tests through NZTA, are subject to driving hour limits and are required to keep logbooks that record their driving hours. All fares must be pre-agreed, and even receiving informal payment for a ride in the form of donation or ‘reward’ means the driver needs to comply with NZTA.  

Overseas, services like Uber and competitor Lyft connect passengers with unlicensed, regular drivers who have space and want to make some money on the side: consumer-to-consumer ridesharing (in London, this led to a big strike from Black Cab drivers and, unexpectedly, a massive increase in Uber downloads). 

This is part of a growing “sharing economy” where regular people are renting out their houses, cars, and even goods like digital equipment when they’re not using it. 

In 2013, Forbes estimated revenue flow from the share economy would surpass $3.5 billion in the year. But the sharing economy has butted up against regulators who have raised questions about how to ensure safety, value, customer service and quality of goods. 

When asked whether it would ever consider introducing drivers who are not licensed to take passengers, as is the case overseas, Uber replied: “All Uber partners in New Zealand are licensed and accredited by the NZTA. Our focus is on continuing to grow on the phenomenal success we’ve seen in this market.”

New Zealand’s taxi market was deregulated in 1989 and has some of the lesser controls in the market compared to other countries, but it doesn’t go so far as to allow paid ride-sharing from unlicensed drivers just yet. Uber has fought, lobbied, and won over regulators before in places like Washington D.C and New York (it reached an agreement with the New York attorney general’s office to modify its surge pricing policy after it was accused of price gouging), and, given the obvious demand for such a service, who’s to say they won’t do it here as well? 

Meanwhile, Auckland Co-op Taxis has been one of the first taxi companies to innovate to keep up with the disruptive competition in the app space.

It launched an app on iOS and Android in November last year, and has now started to see good uptake, particularly in the last three months, Auckland Co-op sales and marketing manager Renee Pimentel says.

Like Uber, you can order a car to pick you up via the app, see the job booked in real time, choose your taxi type, and watch the cab approach with GPS tracking. But unlike Uber, the fares are not pre-arranged; you are still charged on the meter.

At this stage, user and drivers cannot rate each other.

Bookings made via the app on iPhone have increased by 70 percent from 1101 to 1876 in the month from July to August on iPhone, and by 56 percent on Android from 870 to 1354 bookings.

“We expect to see a higher number for September, since we have increased our efforts in promoting the app to our corporate clients as well as put out two bus ads in the past month,” she says. “I think people have got into it recently perhaps because people are starting to get smartphones.”

Taxi Co-op also ran a promotion where booking a taxi through the app in September put you in the draw to win a $100 Co-op Taxis voucher.

Other taxi companies are also starting to see that it’s an “innovate or die” market, and are turning to developers for help.

Green Cabs has an app with a “pick me up from here” function, Alert Taxis launched an app last year, and Wellington’s Harbour City Taxis app is in trial phase.

With a slightly different offering, we also have car-sharing companies CityHop, and the yet to launch Shyft, in Wellington.

These services have a particularly eco focus, and encourage customers to only use cars when they need them. Customers can book online.

The services work on a membership model, and members can borrow a car from CityHop for $15 per hour or less for longer, CityHop spokesperson Alex Scott says.

“People often use them in complement with public transport, i.e. bus into town and then use it to go shopping.”

Scott says overseas this model has been really successful, and it is starting to catch on in New Zealand too.

“We got our first cars in 2007 and it wasn’t till about 2011 or 2012 it began to take off. When the smartphones blew up, there was more ease of access and more people aware of the business.”

She says people are becoming more economically and environmentally conscious, and becoming okay with having just one car. Businesses have also been a growing market, with some using CityHop cars instead of a fleet car.

Scott says the business is still growing, and they’re working closely with Auckland transport around the model.

Yet another option is Cabchooze, an app that again pairs customers with available drivers, with the fare preapproved.

The difference from Uber is that Cabchooze only uses licensed and approved taxis, and the drivers bid for the customer, founder Bk Sharma says.

Sharma also recognises that customers like fixed fares.

“This model makes travel safe and enjoyable as you know how much you need to carry rather than getting heart beats jumping with the cab meter escalating at rocket speed,” he says.

In terms of trends, Sharma thinks traditional taxi services do need to keep up or they could suffer

“Tragically, the traditional channel on meter fare, where the driver is always the winner, will get a beating,” he says.

And finally there is Zoomy.

Zoomy launched in November 2013. Its business model is to sign registered taxi drivers from a range of companies, the customer chooses what kind of car they want (green, disabled access etc.) and the app finds the driver closest by.

Zoomy features GPS tracking, in-app or cash payment, and the ability to rate your driver, something spokesman James Fisk says is very important as it acts as “a self-regulating tool to reward the good drivers and penalise the bad”. 

Zoomy faced some challenges here at first, mainly around consistency in service, he says. 

“The New Zealand taxi industry is deregulated, which has resulted in large numbers of taxis, providing varying degrees of service. When ordering taxis in cities like London and New York, the experience is very consistent – the same vehicles and similar pricing.”

But Fisk says it has worked hard to standardise the app. And, despite the challenges, Zoomy has had 30,000 passenger downloads so far, and has 1,000 registered drivers.

Fisk says many of the downloads have been from users referring others, and a promotion running till December offering 25 percent off all rides has seen a big spike in usage.

He says it’s forecasted that by 2018, 90 percent of New Zealanders will have smartphones, which should result in significant growth in the market.

“In an industry that’s over 100 years old, we really have seen very few advancements, particularly for the passenger. It’s great to see the transportation industry catch up and even surpass other industries in providing new technology to improve the overall consumer experience,” Fisk says.

New Zealand Taxi Federation executive director Roger Heale says taxi companies have had apps on the market for a long time, but admits they haven’t been particularly user-friendly.

But with the arrival of the very consumer-friendly Uber, a lot have released a new version to replace their apps.

“We haven’t been just watching it happen – it’s definitely an up skilling of the game. We are a deregulated market so it is competitive, you have to innovate – survival of the fittest and all that,” he says.

Heale says New Zealanders should see some new app releases coming out soon that provide booking, tracking, and payment options.

But in the meantime, he says most Kiwis are still primarily ordering via phone.

Nielsen Online Ratings from August show that along with the continued rise of people shopping online, we are increasingly using the web to speed up processes such as buying cars or viewing property. It’s also seeing an increase in uptake and usage of apps on mobile devices for banking/finance, travel maps and transportation. 

Between Q2 2013 and Q2 2014 Nielsen Consumer and Media Insights recorded a 35 percent increase in people downloading transportation apps, with 104,000 people now regularly using them.

Downloading of banking/finance apps were up 315 percent and the download of travel maps apps were up 62 percent, with 554,000 people now regularly using these tools.

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