Ola ups ante in online commuter market with motorcycle taxis

NEW DELHI: Ola is preparing to launch motorcycle taxis, sources said, the latest in a string of services the company is building around its core taxi-booking business to establish its turf in India’s vast online commuter market.

India’s No.1 cab aggregator is also set to add a car-pooling feature on its mobile application and launch a shuttle bus service, although these and the motorcycle taxis could crash into regulatory brick walls as legal frameworks do not exist for them. Ola already runs an auto-rickshaw aggregation service.

The bike taxis will be on the lines of Indonesia’s GoJek, Blue-Jek and Grabbike that transport both people and goods, said a person familiar with Ola’s plans. The taxi-pooling service, OlaShare, has been in the works for some time, said another person aware of developments at the company.

Ola declined to respond to emails queries by ET on its upcoming features.

Ola is in the advanced stages of closing a financing round of about $500 million (Rs 3,000 crore) that will give it significant muscle to close out rivals by expanding its car taxi service to new markets and introducing new services to corner a large share of commuters on to its platform.

The new services are also a counter to San Francisco-based Uber that is concentrating its technological and financial might on expanding in India, among its largest markets outside the United States. Uber this week announced the launch of UberPool, its car-pooling service, in India, starting with Bengaluru.

The motorcycle-taxis business “is an interesting move,” said Kartik Hosanagar, a professor of technology and digital business at The Wharton School. “As of now, it should be seen as an experiment. But one with tremendous potential for Ola… However, the company would have to navigate around regulations.”

Mumbai-based motorcycle-taxi company HeyTaxi, launched in June, has come under fire from the city’s transport department, which has termed the service illegal. “If a four-wheeler can take a person to a place in an hour, a bike can do that in 30 minutes. There is huge need and governments should think of regularising bike-taxis,” said Manoj Maheshwari, cofounder of HeyTaxi.

A top official at Delhi Transport Department said the state was framing a scheme for a motorcycle-taxi service but there were issues to consider. “As of now it will be deemed illegal. We were planning to launch such a service in Delhi but have put it on hold due to safety concerns,” he said. Instead, Delhi launched a scheme for renting self-driven motorbikes in August.

Car-pooling services, too, are in a regulator grey zone. Several state governments encourage personal carpooling as a way to lessen traffic and pollution, but as a business, the service is not covered under any legal framework.

Safety is another area of concern, as riders would have to car-pool with strangers. Meru Cabs verifies co-riders with their PAN or Aadhaar numbers while BlaBlaCar mandates a social network account such as Facebook for logging in.

Experts agree car-pooling as a business has huge potential. “Currently, the average taxi fare is about Rs 13 per km. With these new features, if taxi apps can bring the fare down to Rs 3-Rs 4, a large number of two-wheeler riders will start using cabs,” said Jaspal Singh, cofounder of transport advisory Valoriser Consultants.

Presently, Ola’s lowest taxi offering is Ola Mini, priced at Rs 8 per km on a base fare of Rs 100 per ride in Delhi. OlaShare may halve the pricing per kilometer, and fares for the motorbike-taxi be even lower, which will help Ola significantly expand the number of users registered with it.

HeyTaxi charges Rs 7 per km on a base of Rs 20 per ride. Blue-Jek and GoJek, which operate in Jakarta, Bali and Bandung, offer rides for as low as $0.30 per km on a base fare of $1.2.

Ola currently has about 2.5 lakh cabs operating in at least 100 Indian cities through its platform, besides 65,000 auto-rickshaws and black-yellow taxis. The company is expected to cross annual gross revenue run rate of $1 billion (about Rs 6,500 crore) by the end of this year.