As Gett App Grows More Powerful, Israel's Cab Drivers Become Increasingly More Worried

 

Seven years after its launch in Israel, the taxi-hailing app Gett’s metal flag flies from more than a third of the country’s taxis and close to 30% of all rides in a year. But as the company grows bigger and more powerful, drivers are getting worried.

About 8,000 of Israel’s 25,000 cab drivers now use Gett, an Israeli company once known as Gett Taxi that operates in the United States, Britain and Russia as well as Israel. 

As a closely-held company, Gett doesn’t reveal numbers about riders and usage, but sources estimate it accounts for about 20 million riders annually. That would add up to 28% of all rides, based on official figures from the Transportation Ministry.

In any event, it comes to a big chunk of a 5 billion-shekel ($1.4 billion) a year industry where the average fare is 69 shekels. Gett doesn’t employ drivers or own taxis, but collects a fee for linking drivers with passengers and acting as a conduit for payments.

Riders have benefited because Gett’s system is transparent, so drivers can’t overcharge naïve customers and they can pay by credit card. The authorities are happy because it is harder for drivers to evade taxes by taking cash off the books. Central dispatchers haven’t disappeared because most drivers prefer to use the app and a dispatcher to maximize their revenues.

Still, Gett sent shock waves across the industry earlier this year when it won competitive bidding, together with the old-line dispatcher Hadar-Lod (much like their partnership with Radio Taxis in London), to provide taxi service out of Ben-Gurion International Airport, Israel’s main airport and a source of more than 1 million rides annually

Their bid – the only one that was submitted – promised to reduce fares out of Ben-Gurion by 31% from the current level, a much bigger cut than officials at the Israel Airports Authority had expected. 

But the bid ran into fearsome opposition from Hadar-Lod’s drivers, who insisted that discounts like that would cause them to lose money on every fare. 

The partnership broke up and the tender was rescinded and will be issued later this year.

The affair not only left a bad taste in the mouths of Hadar-Lod but has raised concerns across the entire industry that the steep fare cut Gett had proposed was a way of testing the waters for future fare cuts nationwide.

Avraham Fried, chairman of the Taxi Owners Association, has since retained Tzahi Yagur, an antitrust attorney, to lobby for declaring Gett a monopoly and even tried to have the tender itself canceled before the bid unraveled.

They employed Section 26 of the Antitrust Law, which relates to businesses that don’t control a majority of a particular market but have a strong presence. “The extreme and unprecedented discount offered in the framework of the winning bid was given by a ‘monopolist’ as defined by Section 26 of the Antitrust Law,” Fried contended in a letter addressed to the Airports Authority tenders committee and Antitrust Commissioner Michal Halperin.

Fried said the bid was tantamount to predatory pricing because it would not be profitable for drivers. “It will be financed by Gett’s external sources and over time Gett will exploit if ‘single dominance’ in the taxi market and taxi hailing to compensate itself for money-losing fares,” the letter said.