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Ominous signs: strife between Uber and Budapest taxis might be imminent
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Uber returned to the Budapest taxi market in June in a partnership with the Főtaxi group. Their cooperation seems to work well in the summer, but sources say that the balance of power between the two operators could change with the drop in tourist traffic in September.
Uber is back on the Budapest taxi market amid new regulations
On 13 June, after an eight-year hiatus, Uber restarted its operation in Budapest, in partnership with Főtaxi in a surprising move. As Index recalls, it was initially pressure from taxi drivers that made the company’s existence in Hungary impossible. Eight years ago, when Uber first arrived in the country, it operated as a ride-sharing service and thus was able to provide far cheaper prices than taxi services.
Soon after, regulations passed made it unfeasible for Uber to continue operating in the country. Meanwhile, however, Bolt has also burst onto the Hungarian market, threatening other taxi companies.
As a result, the Főtaxi-group announced in February that Uber would return to the country through a partnership with them. Uber reappeared to the market changed, though, now operating as a passenger transport service. In practice, this means that Uber cars are painted yellow and equipped with all the apparatus needed for taxi services. Moreover, as Index points out, the fare of travel is fixed.
Although at the time of Uber’s relaunch, the managing director of F Mobilitás Ltd., a subsidiary of Főtaxi, said that despite the partnership, Főtaxi and Uber will act as competitors, in practice, currently when someone orders an Uber, a Főtaxi car might come to pick them up.
As Index explains, this is because some of the Főtaxi drivers have been offered the opportunity to use the Uber app in parallel to their “main” job. This is a lucrative opening for Budapest taxi drivers because Uber commissions are zero percent for the first three months for those who joined the fleet immediately, while for those who became Uber drivers sometime later, it is five percent for the same time period.
As DNH has shown in this article, these are much more favourable rates than the commissions offered by Bolt or Főtaxi. Precisely for this reason, in order not to lose its own drivers, Főtaxi has opened the door for drivers to use Uber. However, this is a one-way street only, as Uber drivers cannot transfer to Főtaxi.
SATURATION.
Budapest Taxis – the Yellow “Battalion” v the Ubers.
Do the MATHS.
The DIFFERENTAL – equate it against DEMAND – there is SATURATION.
The differential – continues to OPENINGLY display a profession in an aggressive (2) two sided war zone.
Do the Maths.
It will worsen – this RIFT between the Yellow v the “Colours of the Rainbow”.
The focus on Uber is all wrong, in Hungary it’s now just a booking platform providing taxi drivers with business. The real underlying issue is that the cost of taxis has risen so high that only tourists can really afford them. When the summer peak season dies down, taxi drivers end up fighting over the scraps and Uber with its international reach and the inherent trust in the brand (neutralising fears of being overcharged) is a more successful platform for finding customers.