Fast-growing ride-sharing company Taxify, now operating in 23 countries, is launching in Melbourne, promising passengers capped surge charges and better pay for drivers.
More than 10,000 Melbourne drivers have already registered with the Estonian company, lured by its offer to charge a 15 per cent commission. Rival Uber charges a 20 to 25 per cent commission on each fare.
Taxify launched in Sydney before Christmas, offering half-price trips for the first few weeks, and is still offering trips at a 25 per cent discount.
Its drivers will be discounting fares by 50 per cent in Melbourne on Thursday.
Other ride-sharing companies in Australia, such as GoCatch, have failed to compete with Uber, but some analysts say Taxify’s success in Africa, Central America and Europe suggests it may give the ride-sharing behemoth a run for its money here.
Samuel Raciti, Taxify’s Australian manager, said his company’s ride rates were about 5 per cent cheaper than its competitors.
Mr Raciti said the company, which plans to expand to Brisbane, Adelaide and Perth, was drawn to Australia due to Uber’s success.
“It’s a market dominated by one key player. Launching in Australia makes sense, because having a monopoly is not good for anyone, so coming in allowed us to give the consumers some choice, a price difference, and keep everyone on their toes.”
Mr Raciti said lower fees and smaller commissions enabled by the company’s lean operation in Australia had already put it in good stead in Sydney.
“That’s our strategy laid out in front of you, make it cheaper and more reasonable for riders and help drivers earn more.”
The company would cap surging at 1.5 times, and would not start surging fees until four or five months into its launch, with the exception of special events.
University of Canberra economist Phil Lewis said Taxify’s discounted trips had attracted riders in Sydney, and that the discounts were a clever strategy as they encouraged people to download the Taxify app on their phone.
“The big problem for new in-comers is breaking through the market, and the way you do that is to get your app on the people’s phones. It’s a smart offer, you offer a half-price ride to get the app on people’s phones.”
Morningstar senior equities analyst Gareth James said that despite Taxify’s lower commissions it would be almost impossible to persuade Uber riders to switch to a new operator.
Uber did not wish to comment.