In the midst of a crisis with taxis, the general manager of Uber France explains his vision of a world where taxis and VTCs would work together… without conflict.
Do you understand the discontent of taxis who, unlike VTCs, have to pay for licences at a high cost to operate?
I understand the fundamental point that is the cost of the license, but we must be very clear on the fact that this cost only reflects the structural imbalance that exists today between the supply of transport in a city like Paris and the demand.
I am convinced that this imbalance, perpetuated over the years by the famous numerus clausus of taxis, is the cause of the tensions we are experiencing.
Finally, it should be pointed out that the value of the licence does not correspond to an entry fee that each taxi would have to pay to exercise its profession. On the contrary, it is an asset, the value of which has increased steadily over the years, and which is not likely to lose its value in the future, given the scale of the demand that has not been met.
So there has been no loss of value for taxis?
Absolutely not. In the current situation, it is important to see that no one is blocked and that no taxi has lost money, quite the contrary if we look at the evolution of the price of licences. Those who own this licence now have an asset in their hands that they are free to sell if they wish. Some of them decide to sell it to become VTCs.
If VTCs take customers from anyone, it is from the central booking offices, also known as radiotaxis. The consequence for a taxi driver is that he may have one less ride via his radiotaxi centre but he will also benefit from the same volume of rides on the fly, which VTCs cannot do. The current debate is in fact animated by these radiotaxi centers which logically see this transfer of the market with a bad eye. But I think that the marauding market is very far from disappearing.
It’s easy to compare it with a city like New York where you can get a taxi by simply raising your hand. This reflex does not exist today in a city like Paris where it is often very difficult to find an available taxi.
Yet this is the original role of the taxi. It is for this marauding role that taxis exist and that is why they pay a licence. As a result, the value of the licence does not decrease because a taxi will always have as many trips on the fly and therefore, in the long run, as much yield. It is important to remember that the value of the licence is determined by the number of trips a taxi can make in a day.
However, some taxis complain that VTC drivers do not hesitate to take customers on the fly…
“Since we’ve been around, taxis have not experienced a drop in business.”
There is little point for a VTC driver to do this as it is something illegal and as a result, as soon as we learn about it, we immediately exclude it from our platform. We are extremely vigilant on all these issues. A platform like Uber is there precisely to bring more control to the VTC sector, whether it be for example in terms of insurance or registration.
Taxi unions are now calling for a 30-minute or even an hour reservation period, what do you think?
The Council of State has already suspended this waiting time, which was set at 15 minutes by the government. The competition authority has also considered this measure as anti-competitive. So the government will certainly not introduce a new time limit. These are simply proposals aimed at putting pressure on negotiations.
What we need to understand is that VTCs, by creating a new transport offer, have also created more demand. What we have been saying since the beginning is that we are now in a market constrained by supply and that there is therefore room for everyone. VTCs represent a complementary offer to taxis. I note that, for almost two and a half years that we have been in existence in Paris, the value of licences has not stopped increasing and taxis have not experienced any drop in activity. I think it is possible to find a balance as is the case in London for example. What we do remember, however, is the positive feedback from our users who appreciate our service to the point that some of them no longer hesitate to part with their car.
It is also important to point out that a certain number of measures, which are much less talked about, have already been taken to restrict the activity of VTCs. Among them, the need for VTC drivers to undergo a 3-month training course, representing a cost of several thousand euros. The new consumer law also includes a measure to limit the amount of time drivers can park around airports between bookings.
Is ordering a car via Uber cheaper than ordering a taxi? What is your revenue model?
“The original role of taxis is a marauding role.”
It depends on our offerings. If you take our UberX offering, its price will be more or less comparable to a taxi taken on the fly from the street. On the other hand, it will probably be cheaper than a pre-ordered taxi as it is not uncommon for the taxi to arrive with several euros already on the meter. As far as our revenue model is concerned, we charge these VTCs a commission on the volume of journeys, which is around 10% to 20%.
We actually tried to work with them more than a year ago by opening our platform to them. The idea was that Parisians could order a taxi directly from our application. Taxi drivers were quite enthusiastic about it as it was a much cheaper solution for them than going through the big radio taxi groups. However, the leader of the sector was formally opposed to it, by forbidding its members to use our application, which nevertheless offered all taxi drivers a source of additional income…
Has the existence of a company like Uber created jobs in France? Generally speaking, what is the profile of your drivers?
There is no doubt that Uber has created jobs in France. Just look at the number of people who join us week after week. In some cases, it may be people who had no job or others who previously held precarious jobs and choose to retrain as VTC drivers. We help them in their steps by explaining how they can obtain their transport licence. We also assist them in their search for a vehicle, insurance and financing. This new job is often an unexpected opportunity for them.
As far as profiles are concerned, we attract people from very different backgrounds. It is not uncommon to find former truck drivers, delivery drivers or employees of the hotel industry who decide to change careers. Most often, they opt for the auto-entrepreneur system, which allows them to start their new activity quickly. But often the authorized ceilings are quickly exceeded and they have to change regime by creating a company. We have helped a large number of drivers who have subsequently set up their own company and now manage a fleet of 4 or 5 vehicles.
Why did you choose France to launch your new urban carpooling service Uberpop? The DGCCRF recently announced that it had opened an investigation into the matter…
We chose France because it is one of our biggest markets and because it is a country where the collaborative economy is very developed. Tests have already been carried out in the US, where we also offer ride-sharing under a different name. The concept of Uberpop is to allow individuals to drive other individuals in an urban setting and in a collaborative way. It is in this sense that the product has been developed and we are extremely vigilant to ensure that this offer is used for the right reasons. We are of course at the disposal of the DGCCRF and we will do everything we can to show them the benefits of this model, which is becoming more and more popular in Europe given its current success in the United States.
Do you think that the current situation gives France the image of a country that is not very open to innovation? What do they think across the Atlantic?
I don’t think so because France is not the only country with a regulated taxi market dominated by a few players. In each of the countries where these conditions exist, we see tensions similar to those we see today in France. In fact, French users have quickly adopted the uses of VTCs and the country is now one of Uber’s biggest markets outside the US. However, France was the only country to have tried to introduce the 15-minute waiting time.
I am resolutely optimistic and remain convinced that VTC and taxis will eventually coexist. Contrary to what many taxis imagine, Uber does not claim to want to replace them and in no way wishes their death. In terms of our longer-term goals, we will continue to execute our vision that no matter what time of day or where you are, you should be able to order a vehicle within a minute of you in all circumstances.
A native of Paris, Pierre-Dimitri Gore-Coty is a graduate of Ecole Centrale Paris and Columbia University in New York. He started his career in finance in London before returning to France in June 2012 in the hope of embarking on an entrepreneurial adventure. Pierre-Dimitri joined Uber a few weeks later, and is now in charge of the group’s French and Northern European activities.