Policy

RIDESHARE OR TAXI OPERATOR? CRUCIAL QUESTIONS FOR UBER’S HONG KONG FUTURE

Uber Hong Kong’s general manager Estyn Chung in the company’s Causeway Bay offices

Uber’s two-month “Regulate Uber” publicity blitz and its dangled carrot of a regional HQ relocation may have failed to entice the Hong Kong government into regulatory talks but its general manager Estyn Chung says he’s committed to fighting Hong Kong’s corner within the global tech firm.

Uber’s served over two million passengers in Hong Kong, despite legal headwinds (photo: Uber)

After six years operating in Hong Kong, and despite multiple driver arrests and convictions, Chung says over two million Hong Kong people have used Uber’s ride hail services. “It’s clearly something that solves a problem for people in terms of point-to-point transportation,” he says.

The government, however, disagrees. Just last month, a senior police officer told Transit Jam the firm could not be considered a “ridesharing” firm, a claim that left mouths agape at Uber’s office.

Bonnie Ko, Uber’s Hong Kong communications lead, says the concept of ridesharing is in the firm’s roots.

“To me, ridesharing doesn’t only mean car-pooling, it also means me taking my car, picking someone up on the way to work, because that is the whole concept where it started – and I think 60-70% of our drivers on the platform in Hong Kong drive less than 10 hours a week, it’s because they actually take their cars to work to commute.”

However, the firm later clarified, through its media agency The Hoffman Agency, that in fact 41% of drivers operate for less than 10 hours per week, suggesting a much higher proportion of professional and full-time drivers than the company imagines.

It’s an important point, as the true nature of the company’s typical driver may shape the future for Uber in Hong Kong. Are they typically a commuter driving to work, making some extra money ridesharing on their trip, saving resources that would otherwise run idle? Or are they a full-time minicab driver, leasing a new Mercedes-Benz for HK$6,000 a month and adding another private car to the already bloated Hong Kong fleet?

Chung swears it’s the former. “I talk to a number of drivers, they say, ‘yeah I just on turn [the app] on the way home and see where it takes me’. 60-70% of drivers are working less than 10 hours a week, they feel like picking someone up on the way to and from work and have someone to have a chat with.”

“It’s the utilisation of an underutilised resource, making the most economic use out of it, so we’re not wasting it, and making it’s more sustainable,” he says.

A SUSTAINABLE FUTURE?

Other cities have found a significant negative impact from the new sector: A Washington Post investigation found last year that one in every 15 miles driven in Washington DC was in an Uber or Lyft, with an Uber executive admitting the firms likely contributed to an increase in congestion – albeit a fraction of that of private and commercial traffic.

Indeed, the firm’s founding idea, from Garret Camp, wasn’t so much ridesharing but allowing riders to split the cost of New York City’s black limos, the equivalent of Hong Kong’s chauffeur-driven Alphard “boss vans”.

Hong Kong’s ubiquitous “boss vans” clogging the streets: could Uber transform these into a more sustainable mode of transport?

Chung sees the Alphards as an opportunity. “Potentially if cars aren’t left idly parked, you need fewer parking spaces around, so you can start thinking about how you can repurpose that real estate and creating things that are better for the community,” he says.

The regulatory status of Uber’s business model, as well as the reality of its driver make-up and environmental impact, are matters for the company to discuss with government… if it can get a seat at the table. However, the distinctions are, as yet, immaterial to Uber’s ride hailing service in Hong Kong, which is still de facto illegal in the city. And without a regulatory roadmap, it’s difficult for the company to address government or industry concerns, says Chung.

“I think from a sustainability perspective, [ridesharing] makes a lot of sense – but how that plays into regulation, we don’t really know until we have an opportunity to sit down with the government and figure out what their problems are,” he says.

EXPERIENCE ELSEWHERE

Chung contrasts Hong Kong with the Australian approach, which he says is “model regulation”.

“The government was willing to engage with and consult stakeholders and the industry – they formed a specific point-to-point transportation task force to look into it, and they came up with a model that works.”

Sydney taxi licence values have plummeted since Uber was legalised, according to New South Wales government figures

The approach in New South Wales, for example, examined how to compensate existing taxi medallion holders for the potential loss of business as new entrants came in. “But now what we’re seeing is medallion prices in New South Wales are actually increasing, the taxis still have exclusivity on street hail and rank, but with other benefits around technology. And we’ve shown that we can grow the pie; it’s not hurting the taxi industry, it’s making life better for everyone.”

Chung’s assertion on medallion prices doesn’t seem to add up – figures from the New South Wales government show that Sydney medallion prices have, on average, plummeted since Uber arrived, averaging A$102,500 in June 2020 against A$406,000 in October 2012 and A$200,222 at the end of 2017. (Outside Sydney, wide variation in individual medallion prices across New South Wales means there’s no meaningful average to compare over time.)

And while Chung says the firm can only “speculate and hypothesise” what the issues are with the Hong Kong government and stakeholders, a devaluing of taxi licences and taxi businesses must surely be a major stumbling block.

Clash of two systems: an Uber driver hits a taxi in Central – the taxi driver accepted payment from the driver to cover repairs

Charles Mok, IT sector lawmaker, had previously said these “vested interests” were the reason the government had done nothing regarding Uber, and they may prove a tough nut to crack.

The firm’s not new to the fight: Uber actually launched as “UberCab” in 2010, but dropped the “Cab” just a few months later and has been fighting regulated taxi models in every new market since.

“It’s potentially one of the issues we may need to overcome,” says Chung. “Certainly it’s been an issue in a lot of other markets around the world, but again, until we sit down with them… the taxi industry has come out with their views and opinions, but we want dialogue with them to see if we can come out with a compromise and a solution.”

Innovating urban transport

Uber’s recent “regulateuber.hk” campaign promised to bring not only the regional headquarters but also innovation to Hong Kong. The reversal of the HQ relocation is a blow to the firm: before the announcement, Chung said Hong Kong was the preferred location. “It didn’t really make sense to have a regional HQ where you didn’t have a business, a live operating business. If your senior team members can’t use the app, where you are located, you can’t really design solutions to solve the problems of the people that you need to,” he said.

But with the relocation off the table, can Uber offer sufficient tech and innovation to tempt the government to take a fresh look?

Chung says the firm’s strategy, globally, is to become a platform for all transportation modes. Uber Transit, a route-finding service added in June, is the first step in that for Hong Kong, offering ticketing and ultimately integration of point-to-point transportation and public transport.

“So you can imagine going from Bonham Road to Sai Kung: you can get the train to Hang Hau and then jump on an Uber to Sai Kung, and you could buy a ticket and it goes all the way through,” he says.

Such a platform could easily extend to water taxis or boats, says Chung, talking about the sampans that ply the harbours and typhoon shelters.

Could we be looking at Uber Sampan?

“Let’s do it!” says Ko.

Chung rules nothing out.

“Hong Kong is a fantastic place, there’s so many different modes of transportation we could help modernise and actually power all the transportation in the city, integrate it all, solve some of those problems for those who find it hard to move around,” he says.

Uber Assist requires drivers to take a one-day training course, helping them to help those in need

Uber’s Uber Assist service trains drivers to help those in need of physical assistance or with wheelchairs, as an example. And the company is introducing safe “drop off zones” around key buildings, crowdsourced by staff, to prevent the sort of safety issues seen by Ubers piling onto pavements to drop riders off literally at the doorsteps to their apartment buildings.

But these services require engineering support, and territory general managers compete vigorously with their Uber peers to secure new projects. So, for example, behind the rollout in Cairo and Kiev of Uber’s new bus service – branded Uber Bus in Cairo and Uber Shuttle in Kiev – Egypt’s and Ukraine’s country managers fought tooth-and-nail for deployment in their territories. In unregulated Hong Kong, Chung is left on the sidelines, ruing missed opportunities.

“When we launch products, it’s an investment – an investment of capital, an investment of time, an investment in human resource,” he says, “so when we have regulation [in Hong Kong], we can launch these products, hire more people, and hopefully they won’t be choosing Cairo and Kiev next time.”

Categories: Policy, Smart City, Transit

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