Uber Flash is a new service that Uber hopes will placate Hong Kong taxi drivers. Uber Flash is a platform that matched riders with either a taxi or private hire care. The reason that Uber has changed its game plan in Hong Kong is due to the fact that it is illegal to rideshare there. So, by adding the taxi service, Uber hopes to bypass the illegality as well as copy "Gett" through its Uber app.
This new change in direction, conforming to local regulations rather than steamrolling over them, is the main difference between how Travis Kalanick worked to how Dara Khosrowshahi works. Barney Harford, Uber's COO stated that Uber is now focusing on improving its platform and suite of services. Rather than force everyone to conform to Uber, Uber will start to conform to everyone.
Hong Kong has a population of just over 7 million and has around 18,000 taxis with 40,000 drivers. The current taxi medallion price in Hong Kong is around $892,000, and in order to assure they don't go bankrupt like their US counterparts, the HK taxi driver's union is forcing the government to oppose any additional changes to the current 1,500 private car hire licenses that are available.
Rideshare companies have been in a war with local officials stating that they remain behind the times and are not moving forward with new technologies. About 30,000 registered Uber drivers live in HK, and they are constantly fighting officials. Many face heavy fines while others are arrested and convicted of driving without a permit.
Uber executive Damian Kassabgi told the media that "We are actively looking at Hong Kong to understand the taxi market and taxi companies. We'll be willing to partner with taxi companies in Hong Kong. This is something that we are actively doing at the moment."
Uber Flash is a very good transition for Uber, and it does not contradict their business model, it merely supports it by another method. The system will enable riders to choose a driver from a private car or a taxi. The price is still presented up-front and is based on estimated distance. Uber flash has proven to be successful in Singapore, where Uber works with local taxi company ComfortDelgro. According to Kassabgi, UberFlash has improved taxi usage by 19% and gives them an average of $2,200 a week.
Uber's transition to a Gett model, allows them to complement working with taxi's, it does not require a change in the ownership model, so Uber can remain with its standard driver contract and still provide the same service it offers alongside the taxi option.
The Singapore escapade has led Uber to hold contracts with 14,000 private cars and 13,700 taxis'. Hong Kong taxi drivers are now positive with the new development, and this will give Uber an advantage over its competitors. Kenneth She Chun-chi, Uber's HK GM is confident that the taxi drivers will now fall in line with Uber rather than oppose the company, he said "We are still studying how to introduce UberFlash to Hong Kong, such as the regulations, and pricing. As long as there are taxi groups willing to join us, we can make it happen. We can start on a small scale."
While Uber might hope that the two-pronged model would work, local taxi driver unions are still against private car hire services, as Chan Man-Keung, Chairman of the Association of Taxi Industry Development, told the press that "Actually we really appreciate Uber's app system and in fact we are studying our own app system in the hope of countering Uber. However, we can't accept something illegal. Our stance is that if it wants to have some kinds of cooperation with us, it needs to give up its illegal ride-sharing business. This is our bottom line."
My take is that Uber should have considered this in the US too, when starting out, operating two options would have helped taxi drivers as well as helped private car owners find a solution for extra income through driving. It would also have sped up the process of Uberizing the US with local governments. However, that is now in the past and Uber is evolving under Khosrowshahi. This new HK Uber Flash deal is, in fact, a precursor for how Uber can deal with countries where rideshare driving is illegal or where taxi unions are too strong to waste time on breaking them.