Uber cuts fares in face of increased competition

Photo: Courtesy

Uber has lowered prices for its cheaper uberX option in Kampala. The new fares came into effect on 9 February.

The new base fare – the charge for pickup – is Shs1,100, down from Shs1,300. A minute on the trip now costs Shs150 versus Shs200 before, while a kilometre is charged Shs750 from Shs900. The minimum and cancellation fares fell to Shs3,000 from Shs5,000. UberX carries a maximum of four people on one trip who pay one fare.

The New Rates

  Old fare New fare
Base Shs1,300 Shs1,100
Per Minute Shs200 Shs150
Per KM Shs900 Shs750
Cancellation Shs5,000 Shs3,000
Minimum Shs5,000 Shs3,000

The ride-hailing app calculates fares by adding the base fare, total time, distance, the surge price (if applicable) and toll charges (if applicable).

A trip from City Square to Ntinda costs Shs8,000 under the new pricing schedule, from Shs10,600, according to Uber estimates. Kiwatule to Acacia Avenue costs an estimated Shs8,000 from Shs10,500.

The reduced fares come weeks after a similar service, Quick Taxi Uganda, launched in Kampala. Quick Taxi has an app – currently available for Android devices – that can be used to request for a taxi. It started operations in January.

According to Quick Taxi’s app, the base fare if you’re using its cheapest option – the Quick Cab – is Shs5,000 for three kilometres. It charges Shs900 per kilometre and Shs200 per minute. Quick Cab’s minimum fare is Shs5000. The maximum number of passengers allowed on one ride is three, paying one fare.

Uber vs Quick Cab

Uber Quick Cab
Base Shs1,100 Shs5,000
Per Minute Shs150 Shs200
Per KM Shs750 Shs900

Quick Taxi offers three options for rides; Quick Cab, Quick Ordinary Ride, and Quick Corporate. Uber, on the other hand, has only uberX in Uganda but offers more options in other markets.

Uber has introduced bonuses for its 600 drivers – or driver-partners, like it calls them – to make up for the lower pay arising from the reduced fares. Drivers will now get Shs15,000 for every hour they are online and available. Therefore, if a driver earns only Shs10,000 in a given hour, Uber will top up with Shs5,000 to make Shs15,000. If they fail to get a customer in a given hour, the company will still pay them Shs15,000.

In most cases, drivers with Uber keep 75% of the total fare price for each ride while Uber takes 25%.

A statement released by the company says that its “experience in hundreds of cities — from New York to Singapore, Lagos and Nairobi — has shown that the boost in rider demand because of lower fares typically leads to higher driver earnings.”

The Silicon Valley company launched in Kampala in May 2016, upending the city’s taxi and private hire industry. One of the long established taxi services, for instance, signed up some of its vehicles on the upstart’s platform.

Still, there were other companies willing to take it on. In August 2016, Friendship Taxi launched a metred cab service that charges Shs2,000 per kilometre. And the entry of Quick Taxi showed that other players believe there is room for competition in Kampala’s taxi industry.

Uganda Business News understands that about 150,000 people use Uber in Kampala and Entebbe. The company’s target is at least two million.