The Analytical Center Studying Taxi Market Behavior

2 december 2015

The Analytical Center for the Government of the Russian Federation is conducting a study on the taxi transport market dynamics. A visible upgrade of the quality of official carrier’ services and simultaneous reduction of shady businesses are observed.

Since the beginning of the 21st century the market of taxi services in Russia has gone through two technological revolutions, according to experts. The first one - with the appearance of IT-systems taxi management and telecommunication solutions which allow handling more than 5,000 orders per day, doubling the volume. As a consequence - large taxi parks were formed and they used different advertising strategies, new services were developed which ultimately improved services’ availability and quality.

The second technological revolution, which occurred relatively recently, radically changed the transport services market, turning taxi services into a standard city service. Now, it is provided not only by taxi parks which have their own drivers and taxi fleets but also by aggregators - companies providing mobile call-a-taxi services. Aggregators are lacking their own car parks, but de facto are leading in the taxi business pricing. Carrying out key functions of attracting orders and distributing them among taxi drivers, depending on their location, aggregators reduce taxi drivers’ idle running and dead time. Taken together with abandoning advertising costs all these factors allow taxi parks to significantly reduce operating costs and to offer customers’ the best prices.

‘Effectiveness of new ordering technologies can be assessed by key changes in the taxi market – reduction of empty running of cars with the possibility of ordering the nearest car, which allowed to offer the market even short trips with the lowest price. Before aggregators appeared individual taxi companies had not done such things because of the high level of empty running: short trips at the minimum price were not economically feasible,’ said Svetlana Ganeeva, the Deputy Head of the Analytical Center.

Developing online order services increased the number of people using taxi at least once a month. Since 2013 to the end of 2015 this figure rose from 48 to 53%. The number of users ordering a taxi more than 10 times a month is increasing as well - from 3% in 2013 to 6% in 2015. According to researchers, this happens due to increasing availability of transportation and reducing prices and delivery time, standardizing services, and due to services’ quality compliance with customers’ expectations.

Today the Russian taxi aggregators’ market is represented by two so-called ‘Big Three’: in Moscow - ‘Yandex.Taksi’, Gett and Uber X, and in regions – ‘Vezet’, ‘Maxim’ and ‘Saturn’. Only in the capital they undertake more than a half of daily orders - from 120 to 250 thousand trips. Reducing prices on transportation provided by aggregators increases the public demand for service, leads to the growth of the market, increasing the number of legal taxi drivers and their competitiveness in comparison with illegals. According to the study, up to 2010 around 80% of the market was represented by illegal private taxi drivers, and in 2015 the shady sector was reduced to less than 30%.

The study ‘The role of the taxi industry in Russian economy, development of public transport and self-employment’ is not only about technological development of the industry, but also about all of the key indicators of the taxi impact on development of public transport and employment. Comprehensive results of the study will be presented at a Round Table at the Analytical Center on 16th December.