GoCatch chief executive Ned Moorfield says its ride-sharing service will remain cheaper than Uber.Australia’s newest ride-sharing company, GoCatch, is cutting the price of off-peak fares by 5 per cent in Sydney in an attempt to challenge Uber’s grip on the market.
Backed by investors including billionaire James Packer and SEEK co-founder Paul Bassat, GoCatch has signed up more than 1000 drivers in Sydney since it launched its ride-sharing arm, GoCar, in late February.
GoCatch chief executive Ned Moorfield said the company planned for its pricing to “always be cheaper than Uber”.
“[The lower prices are] just a one of a number of elements we have for differentiating ourselves from Uber. Not having surge pricing is quite significant,” he said.
“We are cheaper when Uber is surging and we are cheaper when they are not.”
Uber raises fares automatically when demand for rides increases substantially. The so-called surge pricing has infuriated passengers who have unwittingly discovered they face bills reaching into the hundreds of dollars at periods of high demand such as New Year’s Eve.
GoCatch also charges ride-sharing drivers a commission of 12 per cent on fares, compared with 20 per cent for UberX’s existing drivers. Last month, UberX raised commissions for new drivers to 25 per cent.
GoCatch has told drivers it intends to raise the commission for ride-sharing drivers to 15 per cent within the coming months but Mr Moorfield said its rate would remain lower than its rival.
“If Uber raises prices further, they are going to make it harder for drivers to stay on the road,” he said.
GoCatch’s latest 5 per cent cut to fares applies to off-peak travel – any time other than 8am to 10am Monday to Friday, and 10pm to 2am on Friday and Saturday nights.
Its attempt to boost its presence comes as Uber has dropped its so-called geo-fence around Sydney Airport, which until now had blocked ride-sharing users from booking picks-ups from the terminals.
The airport is also expected to release details within weeks about new arrangements for ride-sharing at its terminals.
Five weeks ago, Uber’s ride-sharing offshoot, UberX, cut prices in Melbourne by 15 per cent. However, Uber said it had no plans to do likewise in Sydney.
The cut to prices in Melbourne infuriated drivers because it reduced their take-home pay.
GoCatch’s ride-sharing business has initially focused on Sydney’s CBD, the inner west, the eastern suburbs and the lower north shore because it wants to create a critical mass of vehicles to ensure prompt response times for passengers. However, it plans to expand in Sydney to areas including the northern beaches.
Mr Moorfield said the number of dedicated ride-sharing operators in Sydney was likely to remain at two, partly because drivers could handle only two apps while looking for passengers.
“I just can’t see how drivers would juggle a third app,” he said.
In a bid to counter Uber and GoCatch, taxi networks in Australia will begin offering iHail from June after the competition regulator decided against blocking the app for booking cabs in the wake of modifications.
Mr Moorfield said up to 40 per cent of the ride-sharing drivers who had signed up to GoCar were taxi drivers.
“A lot of drivers are moving between the two services [GoCatch and Uber]. I don’t think drivers have completely abandoned taxis. It gives them flexibility and they are much more their own business.”
The Baird government legalised ride-sharing services in NSW in December, while South Australia gave the green light last month.
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