Ola starts services in South Wales, eyes expansion in UK by 2018-end

Keeping with its fast-paced drive to enter more mature ride-hailing markets, India's Ola kick-started its service for customers in the UK, its second international market after Australia, on Monday.  

Ola has begun offering rides to customers in the South Wales region and plans to expand its service across the UK by the end of the year. The company said it will offer customers the option to book both private hire vehicles or black cabs. 

"This is an exciting moment for everyone at Ola and we are very pleased that South Wales is where we will be starting our UK journey. Over recent weeks, Ola has received positive feedback from drivers in South Wales and looks forward to providing passengers with a dynamic, new responsible service," said Ben Legg, managing director of Ola UK.

To begin with, Ola is offering discounts to customers while it is charging a nominal commission from its drivers. In order to attract drivers to its platform, the firm said it will charge just 5 per cent per ride from taxis and 10 per cent from private hire vehicles.

The move to expand beyond India comes as the growth of the ride-hailing market back home slows. Both Uber and Ola, which are backed by SoftBank, have stopped discounting rides massively, while also cutting incentives to drivers. The result is a drop in new users signing up to use ride-hailing services and huge attrition of drivers.  

"Like every other internet company in India, Uber and Ola face the problem of moving beyond the top 100 million consumers. This is probably why Ola is going to international markets such as Australia and the UK. They want to grow aggressively as waiting for the market here to grow might take time," said Aprameya Radhakrishna, co-founder of TaxiForSure, a low-cost ride-hailing start-up which was acquired by Ola. 

By going international, Ola is also mounting pressure on its biggest rival Uber, which is under pressure from investors to cut losses and turn a profit. Ola, on the other hand, claims it is already making money from every ride it facilitates in India and aims to become profitable at a company level by the end of the current financial year.  

In Australia, where Ola started its service in February, the company claims it has been able to sign up 40,000 drivers. Usually, in the ride-hailing sector, while driver signups are high for any particular service, only a portion of them are active on the platform at any given time. 

Moreover, given its lower population and higher ratio of car ownership, ride-hailing in Australia is considered to be a relatively smaller market. But, given the maturity of the market, the propensity of customers, who pay the full fare without subsidies, is much higher than in a market like India.  

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel