Johannesburg - Uber, the technology company that connects passengers with professional drivers, believes the up to 20 percent fare discounts it has just introduced in South Africa will increase the earnings of its partner drivers.
Jambu Palaniappan, the Uber regional general manager for eastern Europe, the Middle East and Africa, said yesterday that the primary goal of the discounted fares was to reduce the amount of time drivers spent waiting and increasing the amount of time drivers spent driving customers.
Read: Uber cuts fares in SA
“The fundamental principle is that lower prices lead to increased efficiency and lower prices mean increased access for consumers and a move from taking Uber only on weekends to more day-to-day options,” he said.
Palaniappan said Uber had gone through similar reduced pricing exercises in Lagos in Nigeria, Istanbul in Turkey and in Poland, and the data across the board showed that increased efficiency increased ridership and increased earnings for drivers.
“We’re so confident about the increased earnings that we are ensuring that drivers earn the levels they earned before the price cut,” he said.
Alon Lits, the Uber general manager for sub-Saharan Africa, said they would monitor the impact of the discounts and would reassess these if they did not result in increased earnings.
Despite Uber introducing the discounts, Lits was adamant that its partner drivers remained independent contractors and he was not concerned about possible contraventions of the Competition Act in relation to setting the fares drivers were able to charge.
Flexibility
Lits stressed that drivers had independence and chose when and where to work.
If they did not want to work on the Uber platform, there were other alternatives available to them.
“If they don’t want to do trips at lower rates, then they don’t have to be online. One of the reasons why partner drivers like to partner with Uber is because they have the flexibility of working whatever hours every week and whatever areas they want to work in.
“There is no exclusivity. It’s an open technology platform,” he said.
Lits added that the market, and not Uber, was setting the terms of trade for its partner drivers. He said Uber had a product called “dynamic pricing” that took into account supply and demand dynamics on the platform.
If demand was higher than supply and more people were looking for a trip than there were cars available, prices increased in the application and riders at that point in time had the ability to chose to take a ride, wait for prices to go down or make alternative plans, he said.
Lits said as prices increased, drivers were notified and encouraged to come onto the platform.
“So what happens is that supply either increases and now we have more suppliers to meet the increased demand and prices start to come down or people are not prepared to ride at the higher prices and then we have enough supply for the demand,” he said.
Lits stressed that the pricing was driven by market dynamics and they were not sitting in the background adjusting prices.
Expansion
“There is an algorithm in the background, which reacts to supply and demand metrics,” Lits said.
Palaniappan said Uber had more than 4 000 driver partners in South Africa with more eager to join the platform.
Uber now operates in Johannesburg, Pretoria, Cape Town, Durban and Port Elizabeth, as well as in Nairobi, Mombasa, Lagos and Abuja in sub-Saharan Africa.
Lits said Uber would be expanding in the next three months into Ghana, Uganda and Tanzania.
Palaniappan said expanding into Africa was one of the core pillars of Uber’s global strategy this year.
BUSINESS REPORT