Ride-hailing major Ola launched its services in London today (Feb. 10).
In July 2019, the Bengaluru-based company had received a 15-month licence to operate in the city. It has been operating in the United Kingdom for a year-and-a-half now, with a presence in 28 cities. “Ola has over 25,000 drivers registered on the platform, bringing scale to its London offering immediately,” the company said in a press release today.
It has teamed up with British motoring association AA, consulting giant Mercer and education firm Pearson to ensure driving skills, risk assessment, customer service, and English language skills.
Prior to its London launch, Ola stepped up its safety game with new features like “Guardian,” which uses artificial intelligence and machine learning to automatically detect irregular vehicle activity; “Start Code,” which ensures customers and drivers are correctly matched; 24/7 voice support for riders and drivers; and a cap of six penalty points for drivers on its platform.
In February 2018, Ola made its international debut in Perth, Australia. Then, it drove into the UK—Cardiff, to be specific—in August 2018. The next month, it launched in New Zealand.
The draw to expanding to these markets, including London, is obvious: big-ticket value. For instance, the taxi base fare in Mumbai is Rs50 (£0.54). In London, it’s £3.20.
But this expansion is likely to cost Ola for now as the company has entered the new markets with its high cash-burning strategy. As an inaugural offer, Ola drivers will retain 100% of their earnings for the first six weeks, the Softbank-backed firm said. Meanwhile, passengers are being lured with £25 of ride credit for signing up in the first week.
“Ola’s operating losses are increasing, which is a cause of concern. Though it has plans to become profitable, these actions don’t support the strategy,” Yugal Joshi, vice-president at Texas-based consultancy Everest Group had told Quartz earlier.
The question is, whether or not these efforts are enough to put Ola ahead of Uber, which has been in London for eight years now.
Uber’s bumpy ride
Ola is driving into London at a time when its biggest rival, Uber, has locked horns with the authorities there.
In October 2016, an employment court ruled that Uber broke the law by not providing two drivers with certain benefits. The San Francisco-based company’s licence was revoked on the grounds of failure to report “serious criminal offences” by its drivers and its use of surreptitious tracking technology, among other things.
Several London cab drivers also planned legal action against Uber, claiming they have lost £10,000 ($12,970) a year since the company began operating in the city in 2012. Most recently, in November 2019, Uber was stripped off its London license after Transport for London (TfL) found that more than 14,000 trips were taken with 43 drivers who had faked their identity on the firm’s app.
However, the company continues to operate while it appeals the decision.
Meanwhile, battle is brewing on Ola’s home turf, too. In its quarterly report released on Feb. 6, Uber claimed to fulfil over 50% of the rides in the country, citing internal estimations. Ola, meanwhile, maintains it is “India’s largest mobility platform.”
The American giant is currently in 50 Indian cities, under half of the hundred-plus cities Ola is in. But it is becoming more bullish. Last month, it shed some flab by selling its food-delivery arm, Uber Eats, to Zomato. It is now left with more time, resources and funds for the cab wars.
Only time will tell if it races ahead in London, India, or elsewhere.