What is ride hailing?
Ride hailing is when a person uses an app to “hail” or request a local driver to pick them up and take them directly to a specific location.
After large, global ride hailing companies like Uber and Lyft opened up the market, and a second wave of more geographically-focused ride hailing enterprises like Gett, Grab and Curb followed, we are now seeing small-to-medium size ride hailing startups entering the stage. These startups tend to serve fringe and niche markets that the big players haven’t occupied yet but also compete head-to-head with the big dogs in specific cities, proving that anyone, anywhere can launch their own ride hailing service.
Over the last few years, open mobility tech has become more accessible and democratized, supporting ride hailing entrepreneurs in launching from the ground up, while also enabling existing transit agencies looking to integrate ride hailing services into their systems.
In this post, we’ll break down the nuts and bolts of ride hailing: what it is, how it’s grown, and what it’s future may look like.
What is ride hailing?
Ride hailing is when a person uses an app to “hail” or request a local driver to pick them up and take them directly to a specific location. These trips can take place on-demand or scheduled in advance, and passengers may either ride privately or pooled with other riders.
Ride hailing vs ride sharing
Ride hailing is about getting one customer from point A to point B, such as Uber or Lyft. Whereas ride sharing involves pooled trips, where multiple, independent passengers share one vehicle to get from A to B. However, the two terms are often used interchangeably, as many ride hailing services give customers the option to share rides with other people in order to lower the price of a trip, such as UberPool or Lyft Shared Rides.
Here at Spare, most of the services we power are a combination of ride hailing and ride sharing, using Spare Launch to operate private trips as well as real-time pooling, which drives down the cost of operations—and the cost for riders.
Ride hailing vs taxi services
The main distinctions between ride hailing and taxi services is that ride hailing trips are booked through an app and offer pooling options. Taxi services offer private transportation and are typically not pooled.
Ride hailing vs carpooling
These two terms are also often interchanged. Carpooling is when a driver offers a ride to passengers that are heading in the same direction in order to offset the costs of the trip. Whereas with ride hailing, passengers book a ride from one point to another and the driver earns a profit.
The rise of ride hailing services
While it’s business model has developed over the years, the growth of ride hailing began with Uber, which launched in San Francisco in 2009. Uber initially started as a black car service, offering rides in luxury vehicles at prices higher than a traditional taxi ride. In 2012, their services developed to a much closer notion of what we classify as ride hailing today, allowing riders to request a ride through an app. Also in 2012, Lyft launched its own ride hailing services.
Although Uber and Lyft are the ride hailing leaders in North America, there are a number of other services around the globe. As of 2018, the global market size of ride hailing services was $34 billion. And while the projection for 2021 is estimated to have decreased by 2% due to the effects of the pandemic, the global market size has recently reached $117 billion.
How smaller ride hailing startups are emerging
The ride hailing landscape may focus on big players like Uber and Lyft, however, a number of smaller startups have started emerging. In fact, the market for ride hailing startups remains fairly open to entry, especially in areas where large ride hailing providers don’t currently operate, such as small or rural communities, or inner city neighbourhoods with lower density. In addition, unlike Uber and Lyft, local mobility entrepreneurs don't necessarily rely on economies of scale in order to become profitable.
On-demand mobility solutions, such as Spare, have especially created opportunities for new ride hailing businesses, as they enable anyone, anywhere to launch a service. (You could even have one up and running in less than 48 hours!)
Let’s take a look at a couple of ride hailing startups currently powering their operations with Spare:
- Whistle! — Based in British Columbia, Whistle! uses Spare’s driver app to manage their fleet. With Spare’s rider app, they’re also able to offer riders flexible booking options such as pre-bookings, long-distance trips, and various pricing levels.
- Earth Rides - Based in Nashville, Earth Rides is a ride hailing enterprise using Spare to manage their entirely electric fleet of vehicles and pool of drivers, who, unlike many other ride hailing companies, are all employees as opposed to contractors.
How traditional taxi companies can benefit from this trend
One issue faced by taxis and solved by ride hailing services is the ease of connection. With ride hailing, connecting with a driver is as simple as the push of a button. Whereas with many taxi services, hailing a ride often means physically flagging down a taxi in the street or calling a dispatcher to be manually connected to a driver, both of which can result in long wait times.
With this inefficient matching process, drivers are often forced to circle around looking for riders in the street, costing taxi companies time and money.
So how are taxi companies evolving to address these challenges? Many of them are leveraging their existing vehicles for their own ride hailing services, introducing their own booking apps, and allowing them to remain competitive with Uber and Lyft. They’re also able to boost the rider experience by reducing wait times and offering real-time information about their trips, such as live estimations of when their driver will arrive and exact pick-up locations. This establishes a layer of communication that traditional taxi services don’t typically have.
Coastal Rides is an example of a traditional taxi company that operates as a ride hailing service. Located in British Columbia, Coastal Rides allows the Sunshine Coast community to book affordable transportation through a Spare-powered app that encourages and facilitates shared or pooled rides. This enables Coastal Rides to serve as many riders as possible with the fewest kilometers traveled.
The benefits of ride hailing and taxi company partnerships
While ride hailing and taxi services have often been in competition with one another, many communities are experiencing the benefits of ride hailing and taxi companies building partnerships and working together to provide people with efficient, adaptable mobility.
For instance, many transit agencies have started relying on non-dedicated fleets supplied by ride hailing and taxi companies, to satisfy fluctuating demands. During peak hours, those non-dedicated fleets can be dispatched as an efficient and cost-effective option for meeting on-demand transit needs.
These kinds of partnerships have become a lot more straightforward due to open platforms such as Spare, that support the brokering of trips to outside parties. We’ve seen first-hand the benefits of transit agencies and ride hailing or taxi services working together, including these examples:
In the face of COVID-19, Mallorca’s Empresa Municipal de Transportes Palma (EMT) faced the challenge of adjusting no-longer-needed bus lines while ensuring critical workers and transit-dependent residents could still rely on public transit. In order to guarantee social distance and appropriate safety measures, it was determined that local taxi drivers and associations needed to be part of the solution. Spare stepped in and helped EMT launch a fully-operational, mixed-supply on-demand transit system in less than 48 hours, combining buses and taxis thanks to trip-brokering. This not only ensured transit access to residents, it also allowed taxi drivers to feel included in Mallorca public transit, instead of in competition with it.
Durham Region Transit
In 2020, Durham Region Transit (DRT) partnered with Spare to launch an extensive on-demand microtransit service, looking to increase transit access and improve travel times for more than 600,00 residents in communities surrounding Toronto. On top of utilizing their own minibusses to provide on-demand services, DRT has been able to broker trips to local taxi companies during peak hours or when bumps in ridership are expected, allowing them to stay on top of daily demand fluctuations. When DRT enables trip brokering, Spare automatically evaluates the current demand and determines where it’s more cost and time-efficient to deploy a taxi or a DRT minibus.
We are currently in a great time for emerging ride hailing startups. There are many situations and areas where smaller or regionally-specific services currently make more sense than larger TNCs like Uber and Lyft, and thanks to ride hailing solutions like Spare, there is lots of fertile ground and opportunities for anyone to start their own service, regardless of existing infrastructure.