Gasoline prices are on the rise. Very gas friendly. A problem that comes from even further than the question of the war in Ukraine. We’ve been dragging this issue out for a long time. The answers are not long in coming, mainly in the field of platforms. unanimously, all companies in the ecosystem have increased the price of their journeys. For Bolt, and in the words of Daniel Georges, director of ride-hailing and taxis for the company, hypertextualis a necessity they have perceived to continue to maintain viable operating margins.
Bolt, the Estonian ride-hailing and taxi company that has been operating in Spain since July 2021, was the first. A month ago to be exact. They made the drastic decision to raise prices by 10-15% for each ride. The minimum has increased from 3.50 to 4.50 euros (30% more), the price per minute has increased from 0.10 to 0.13 euros, plus an additional 0.50 euros per trip.
They are not alone, Uber has increased the trip by 0.50 euros. First in the United States for all its services, including Uber Eats, and a few days later in the rest of the regions for passengers only. Cabify, the Spanish version of the sector, had shown no signs of life. We now know, from what technology is hypertextual, that journeys will increase, on average, by 0.65 euros. The measure, in fact, has been active in Madrid since yesterday and in the coming days it will be extended to the rest of the cities in which the banner is operational. The cause? The same as everything: the price of fuel. The goal? Also make the service more sustainable and profitable for all parties.
And it is that beyond Bolt, Uber and Cabify, the transport sector with passengers, taxis and VTC, is on a war footing. Especially the taxi. In addition to the goods strike and protests from the world of fishing, farming and agriculture, a new player has now been added to the game. The fuel situation is close to reaching its peak. So much so that the sector has already announced that it will join the demonstration next Sunday to pressure the government of Pedro Sánchez to speed up measures to mitigate high fuel costs.
Bolt, Uber and Cabify’s problem isn’t just with gas
“Petrol is all over the headlines, but there are no problems in several areas,” says Georges hypertextual. The problems of the passenger transport sector, mainly in the VTC sector, They have a much wider range of options.. The one they dragged long before the fuel crisis.
There are no cars, but there are no drivers either. The first finds its origin in the shortage of chips. Few cars hit the market for normal users, and the same precarious number for a limited sector in terms of models and features. With less incidence in VTC than in taxis -the latter have strict requirements-, Uber, Cabify and Bolt drag the same problem. Just like the lack of manpower.
In fact, at the moment the competition season is closed due to the lack of pilots and operational cars. Bolt is catching the eye of an industry being swept away by the highest bidder. And it does this with a strategy that is not new: lowering the prices of operating commissions, with offers for users. Results: in just 7 months that they operate with VTC in Spain they have gone from 1,000 to 7,000 the partners. Figures that exceed, in some regions, those of Uber and Cabify.
Despite everything, and although its associates are multiplying, the problems accumulate at the gates of technology. “Generalized inflation with rising labor costs could endanger the business model of Bolt and its partners,” says Georges. In other words, the increase in prices per trip due to the price of gasoline is not just to save drivers. This crisis is defeating a sector in which intermediaries must present an attractive margin to your investors. In the case of Bolt, for these 628 million euros that he raised at the beginning of the year from Sequoia Capital and Fidelity Management & Research Company LLC, among others already active in the Estonian capital.
The measure, which they defend as a well-researched and well-founded decision, is unclear for how long it will last. Uber took about 60 days to study the market and expand its margin if prices did not ease. Bolt prefers to stick to the mantra, which almost never fails, that prices rise quickly but take a long time to fall.. And despite the fact that they trust the measures that will come from the hand of the government, they do not want to make predictions.
However, they are aware of one fact: “If inflation is not controlled in the medium term, and we are forced to adjust prices, this will have a negative effect because we cannot act on prices without affecting demand. A request that, at this moment, is on your side. With higher earnings for co-drivers, Bolt is catching the eye of an industry that is being sold to the highest bidder. The more drivers there are, the more supply there is. And the more supply there is, the more there is availability for users who want faster service and who, for the moment, are not sensitive to price increases. For now, of course.
And what do we do with the taxi
For some time, and with a more than limited availability of VTC drivers, the sector of mobility platforms with passengers has resorted to a business in which cars are not only lacking: taxis, Uber, Cabify and Bolt, with the help of the regulation which authorized the price closed on the ways, allowed the taxi to enter on its quays.
What is happening with the rate changes for this sector? They do not apply, because the room for maneuver is limited. And yet the effects are the same as in any fuel-based industry. In Bolt’s case, the eggs were put in the government’s basket: “Lower fuel taxes so they can mitigate the impact.” Precisely the reason that articulated the demonstration next Sunday.
In the long run, they also place a lot of trust in regional regulations that assimilate the VTC activity to that of the taxi and allow greater flexibility in pricing and activity. In the case of Madrid, where the Community of Madrid of Isabel Díaz Ayuso circumvented the limitation of the Ábalos law, the new regulation is already in the project phase. The one that, according to Georges, says “if something ain’t broke, don’t change it”. Just as they intend to influence other communities. Andalusia specifically and also led by the People’s Party. And the one that follows the recommendations of the European Union which advocates free competition and the removal of operational barriers (pre-contracting systems and return to operating bases between services) that Barcelona is defending at the moment.