Months after Uber left, where are the new ride-hailing firms?

AT A GLANCE

 Part 1 of 2

MANILA, Philippines – Users of ride-hailing services were promised new options after Uber exited the Philippines. Almost half a year has passed but the firms have yet to make a difference in the market.

When Grab bought Uber's Southeast Asia operations, the country's anti-trust agency, the Philippine Competition Commission (PCC), warned of a "virtual monopoly" of the industry.

Grab Philippines offers ride-hailing services for sedans, taxis, 6-seater vehicles, and premium cars. It also introduced ride-sharing in the market.

In a bid to "break the monopoly," the Land Transportation Franchising and Regulatory Board (LTFRB) accredited 6 new transport network companies (TNCs) – MiCab, Hirna, Hype, Owto and GoLag in April; and ePickMeUp in June.

They were set to challenge Grab's dominance in the ride-hailing industry, as drivers, too, had more choices on companies to link up with.

But the companies are faced with problems that keep them from making a difference in the market, ranging from capital investments to recruiting drivers and getting riders.

Where are they now?

Taxi apps 'are okay'

In the case of taxis, the LTFRB recently recalibrated meters to implement the fare hike that would include a P2-per-minute travel charge. The flag down rate for taxis remains at P40 but the distance rate is now at P13.50 per kilometer. 

The LTFRB also now requires operators to have a mobile application from an accredited TNC. It leaves them to choose from taxi-only firms Hirna Mobility Solutions Incorporated and MiCab Systems Corporation, or those with mixed services such as Grab or Hype Transport Systems.

In separate interviews with Rappler, executives of MiCab and Hirna said that they have been faring well since they were accredited in May.

For one, both firms do not charge booking fees, which they think should attract riders as they would only have to pay for the amount on the taxi meter. (READ: How much are the fares of new ride-hailing apps?)

Coco Mauricio, Hirna's founder and managing partner, said the LTFRB should review the cap on the franchises given to taxis as public utility vehicles.

"We're doing okay. But it can be better if more taxis would be joining us; if the cap for the taxis are increased," said Mauricio.

MiCab, for its part, currently has 7,000 registered taxi drivers and operators in some key urban areas such as Metro Manila, Baguio, Cebu, and Iloilo. Hirna has some 6,500 partners operating in Davao City, Cagayan de Oro, Iligan, Bohol, Bacolod, and Iloilo.

But MiCab acknowledged the fierce competition, especially with the taxi services being offered by Grab under GrabTaxi.

"Competition is fierce, especially with global multinational companies and very rich companies in the Philippines. There's Hype, and Grab is a multibillion-dollar company," Kris Montebon, MiCab's head of operations, told Rappler.

In July, MiCab accused Grab of "phantom bookings" on their platform, and of  creating fake accounts to sabotage MiCab operations. MiCab accused the company of  attempting to poach its drivers too.

Montebon said that MiCab's key advantage is its particular focus on the taxi industry. In a way, he said, it is "improving its service quality," as there has always been a negative commuter perception of taxis.

There are an estimated 42,000 taxi operators nationwide but the figure has never been adjusted for the longest time. When the LTFRB suspended Uber for a month in 2017, it said it was studying a proposal to increase the cap on taxis in Metro Manila.

Competing with the giant

Other ride-hailing firms competing head-on with Grab for riders and drivers of transportation network vehicle services (TNVS) face more challenges.

Despite having thousands of drivers registered on their platforms, Hype and Owto are having a hard time keeping their drivers online because of incentive schemes "not at par with Grab."

On top of financial constraints, both firms still experience minor glitches on their apps.

Hype chief operating officer Jen Silan told Rappler that only 30% of their 10,000 to 15,000 bookings per hour are being served. Hype has 13,000 taxi and TNVS drivers combined.

"Bookings served are still quite low. Honestly, not all the 13,000 drivers are going online so we were not able to serve a big percentage of the total bookings yet. Of course, there is still the perception among the riders that if there are no drivers in your area, then it would be hard to book," Silan said.

She also noted that competing with Grab is a challenge in terms of capital investments. Hype's commission per ride is set from 5% to 15%. (READ: [OPINION] How the looming Grab monopoly will impact on Filipino commuters)

"It's really a challenge, especially if Grab is giving incentives that are not sustainable for the company (Hype). We're not into that kind of competition. What we are offering to our drivers is permanent commission," she said.

Owto chief executive officer Joel Gayod said that the company also suffers from lack of drivers, making it unable to cater to its 86,000 booking requests daily. 

Gayod complained that the "playing field is not fair" due to the "predatory practices" of Grab.

"We're facing a lot of challenges mostly because of the predatory practices of Grab. We can come up with an incentive scheme but what they do is practically giving away top-up that we cannot match. This kind of practice will kill us, the new TNCs," Gayod said.

While Grab takes up to 20% of the driver's earnings, the ride-hailing giant gives a considerable payout through incentives to its TNVS partners, which Hype and Owto cannot match.

"The LTFRB should always protect the new players. There should be some safeguards against these practices. Or else, we will die sooner or later and Grab will remain as a monopoly," Gayod said.

Some still adjusting

Go Laguna (Go Lag) is the sole ride-hailing service offering rides to Greater Metro Manila Area commuters, who are sometimes rejected by  TNVS drivers because of the distance.

But it has yet to be fully operational, partly because of backend payment schemes being sorted out by the company, said Go Lag operations director Willie Bercasio.

Bercasio told Rappler that there are currently 700 drivers that have signed up with them and there are around 150 on board. But Go Lag has been fielding only 50 rides per day in Laguna to avoid losing money.

"We are still beta testing. If we take on more rides, we would start losing money because we also pay for our infrastructure like the bandwidth system," Bercasio explained.

He disclosed that they haven't earned from the business yet, as they have not asked for service fees from the drivers so far.

Meanwhile, ePickMeUp, the latest addition to the accredited firms, has yet to be launched. It used to be a logistics firm but it decided to venture into the ride-hailing industry.

Viable competition

The LTFRB issued Memorandum Circular 2018-016 suspending applications for accreditation of new ride-hailing firms effective August 29.

The LTFRB said it issued the order so it can focus on pending applications and to monitor existing ones. 

This means that there are only 8 apps to choose from, including U-Hop, until the regulatory board accredits a new firm.

PCC Commissioner Stella Quimbo pointed out that it's not so much about the number of apps available for consumers, rather the viability of such firm to enter the market.

"On paper, they are there. But have they made a dent in the market? We know that they haven't, right? The 6 that can compete with Grab are not yet competing," Quimbo told Rappler in an interview.

There were some 65,000 active drivers on Grab's and Uber's platforms, merged in a masterlist submitted to the LTFRB earlier this year.

When Uber left, Grab mostly answers to the full demand despite the "undersupply" of drivers because not all drivers moved to its platform.

Grab said that it only has 35,000 drivers available for 600,000 bookings made per day. To maximize the available number of franchises currently open, the LTFRB allowed 10,000 new drivers to apply as TNVS drivers.

Quimbo acknowledged that current local players challenging Grab face a difficult task. She said the ride-hailing industry is a two-sided market – both drivers and riders should be satisfied enough to grow.

"[They] need to attract the drivers and the riders. That in itself is a heavy capital requirement. The cash flow requirements are big if it comes to giving out incentives to both sides of the market. That's the challenge," she said.

Grab has recently pulled in $2 billion worth of investments that brings its total funding to $6 billion – $1 billion of which is from Japanese car giant Toyota. The Financial Times reported the firm is looking at an $11-billion valuation.

With funding on the side of Grab, how will the new ride-hailing firms fare in the coming months? – Rappler.com

Aika Rey

Aika Rey covers the Philippine Senate for Rappler. Before writing about politicians, she covered budget, labor, and transportation issues.

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