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What Ola is up against in New Zealand

After testing the roads of Australia and the UK, Ola has now launched in 3 cities in its third commonwealth country: Middle Earth. Oh, sorry, Hobbiton.. Umm.. Bag End? Erm, yeah, nah, sorry, I mean New Zealand (Auckland, Christchurch and Wellington). It has appointed Brian Dewil as its country manager for NZ, who says that “Kiwis have had too little choice when it comes to rideshare.”

Having lived in NZ for a while, I can attest to the fact about little to no choice when it comes to private transport services in the country. New Zealand is quite a small market (population 4.5 million) and has traditionally operated with radio cabs which charge a bomb to go both small and large distances.

Ola’s competitor Uber launched in NZ in 2014 and is currently available in Auckland, Wellington, Christchurch, Hamilton, Tauranga Dunedin and Queenstown. Uber claims to have 5,000 drivers and 400,000 users in the country.

Uber’s ride in New Zealand has not been without hiccups, akin to its global foray. It has faced issues like:

NZ regulations of the taxi industry; Uber’s threat to the government

In August 2017, the NZ Parliament passed the Land Transport Amendment Act 2017 deregulating the NZ taxi industry. Essentially, it clubbed taxis, shuttles, private hire vehicles and app based passenger services into a category called the “small passenger services.”

While the taxi industry was not happy with these regulations, neither was Uber. Before the LTAA 2017 was passed, Uber wrote to the government asking for segregation between services like itself and traditional taxi services. In case this did not happen, it threatened that it would not launch its carpooling UberPOOL service in the country, and it has not.

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Read more here: Assuming that Uber will play by the rules in NZ is a mistake: It already does not.

See a part of Uber’s submission to the public consultation before the LTAA 2017:

A review that intends to ‘future proof’ the regulations should deliver a better outcome for New Zealanders, not simply another version of the status quo. If these changes are not made, then the benefits of ridesharing and other opportunities, such as technology assisted carpooling, through UberPOOL will not be able to be made available to New Zealand.

The review has coupled the regulation of ridesharing with further deregulation of taxis. These two projects can proceed independently. The discussion paper already endorses the essential elements of the ridesharing model. It is fundamentally different to taxi services and should be treated as such. As an immediate step, the Government should act to regulate ridesharing in the interim using its delegated legislative powers, pending more ambitious reform of the entire industry.

What will Ola do?

It would be interesting to see what approach Ola takes in New Zealand. Everything aside, Ola has done well in appointing a country manager based in NZ. Governments usually want a liaison to talk to if a service is operating in their country. While Uber has gotten away by not having offices in some of the places it has launched, Ola’s liaison will serve it well.

Ola currently claims to have 125 million users across India, Australia (50,000 registered drivers) and the UK. It also claims to have the lowest commissions (9%) in the industry and pays daily instead of weekly. However, this commission rate seems to be reserved for NZ at the moment, since, according to multiple drivers in India, Ola charges as much as 25-30% of a trip fare.

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Meanwhile, I’m calling it before anyone else does: Ola will launch in Canada next.

Image clicked by author

Written By

I'm a MediaNama alumna from 2015-16 (remember TinyOwl?) now back to cover e-services like food and grocery delivery, app based transport and policies, platforms and media in India.

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

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