Uber app

Uber Arrives in Amman

Uber recently launched its massively in-demand smartphone app in Amman, allowing passengers in the capital to hail a ride at the touch of a button. But will it encounter the same resistance as it has elsewhere? And with several other similar services already available, what are its chances of finding major success?

By Laith Abou-Ragheb

For a growing number of Ammanis, the days of having to wait on a street corner to flag down a cab are becoming a fast fading memory. This is thanks to the recent proliferation of ride-hailing apps and hotlines from the likes of Easy Taxi, Careem, and Taoseal Taxi which quickly connect passengers with nearby drivers using location tracking technology.

The latest ride-hailing service to be launched in Amman comes from Uber, a company currently generating a huge amount of global buzz (and not a little controversy). Since launching its services in San Francisco in 2009, Uber has quickly spread to 311 cities across 58 countries. There are now more Uber cars driving around the streets of New York than the city’s classic yellow taxis. The company has been attracting mind-boggling levels of investment along the way, with some reports suggesting Uber is now looking to raise up to $2 billion in venture funding that would value the company at greater than $50 billion. If successful, it would become the world’s most valuable startup.

Uber has branched out to most major cities in the region, including Cairo, Abu Dhabi, and Jeddah. So why did the company decide to add Amman to its list? “With Amman’s obvious congestion issues, we wanted to make sure that commuters had another transportation option which they could use,” Uber said in an email interview. “Amman was also an ideal market for us due to its young population and fast-growing tech community, making it an exciting and vibrant city for our operations.”

Uber said demand for its service in the city had been “amazing” since its April launch. Even though theydeclined to provide specific numbers to back this up, there’s clearly significant consumer interest in ride-hailing services in Amman. Easy Taxi’s Middle East CEO Mahmoud Fouz told Venture  in March that his competing ride-hailing app had topped 50,000 monthly downloads, with one-third of Amman’s 12,000 licensed taxi drivers also having signed up to the service.

Transportation consultant Hazem Zureiqat has become a regular user of Uber since its launch, and welcomes its arrival in the capital. “I think it’s great that they started up in Amman. I think it raises the standard for this kind of transportation,” he said. “At the end of the day in terms of transport, we need mass transit and good public transportation. But it definitely doesn’t hurt to have these kinds of ride sharing services. I’ve heard people say they might not use their car for certain trips and use Uber instead. That translates into fewer cars on the road, fewer parking spaces that are occupied, so it has its benefits in terms of easing congestion.”

Zureiqat agrees with Uber’s assertion that its service will prove particularly attractive to Ammanis who are forced to commute by taxis because the alternatives are so unappealing. “In Amman, because we lack a proper public transportation system, yellow taxis have played a role as a commuter mode. You don’t take a taxi to work every day if you’re in Europe or New York, for example,” he said. “But the level of service offered by yellow taxis (in Amman) is not the best. So Uber has been able to offer a kind of premium service and can also potentially be used as a commuter mode. The prices are reasonable, so to a certain extent they could be used for regular trips and not just be seen as a ‘luxury’ service.”

It’s crucial to remember that Uber doesn’t actually own any of its cars, which is pretty remarkable considering its stratospheric valuation. Rather, Uber merely teams up with a local transport provider that agrees to abide by its standards and guidelines.

Unlike other cities, Uber is currently only offering its cheapest service—UberX—in Amman. This means the car that’s sent to pick up passengers will likely be a no-frills Korean or Japanese mid-sized sedan. “The lower rates of UberX makes our technology more accessible to more people and allows us to partner with a wider network of transportation providers who, as a result, can help grow their business,” Uber said. The company declined to state how many of its vehicles were in operation, but it did stress that its goal was to “match supply with demand.” At the time of writing, there appeared to be eight Uber cars available for hire on the Uber app’s GPS map screen.

The service charges a minimum fare of JD2. It then charges a base fare of JD0.70, followed by JD0.16 per kilometer. Uber concedes this is higher than a yellow taxi, but it believes a significant number of passengers are willing to pay a premium for its services. “We are giving Amman residents and visitors an alternative choice in transport, and our goal is to deliver on safety, reliability, and convenience and the overall quality of service,” Uber said. Also at the time of writing, Uber was offering one-way trips between Amman and the Queen Alia International Airport for a mere JD15, much lower than the $20-25 dinars or so typically charged by a standard yellow taxi. Here, Uber is no doubt going after visitors to Jordan familiar with using its app in their home countries.

Driving Disruption

Uber Arrives in AmmanUber hasn’t achieved its rapid expansion without treading on a few toes. Licensed taxi drivers around the world have staged protests over an Uber service which effectively allows anyone to use their private car to pick up passengers, and charge them a considerably cheaper fare. Many city governments have moved to ban this service, with Uber launching legal appeals.

When it comes to Jordan, Uber, like the rest of ride-hailing competitors, has opted for a more softly-softly approach to entering the Kingdom’s heavily-regulated transport sector. It hasn’t tried to introduce the same freelance-style service that has attracted so much ire from existing taxi drivers in cities like Paris.

Uber said it is licensed to operate in Jordan as a technology company and currently contracts out the use of its platform to local transport companies, including “well known” car rental companies. Whereas Uber’s competitor, Easy Taxi, only connects passengers with existing licensed yellow cabs.

Ever since it was set up, Uber has been very clear about what type of company it should be bracketed as. “As a technology company, we don’t employ or license drivers but only work with the existing licensed supply to provide them with the efficiency and reliability of the Uber app, helping customers get safe rides when they need it,” Uber said.

But Uber’s assertion that it’s not a transport company and therefore shouldn’t be regulated as one is being challenged. “Uber is a technology, but it is a technology that has an impact on transportation … We’re taking our time to analyze, see, and study,” European Commission spokesman Jakub Adamowicz said at a news conference in April, after European Union regulators were asked to review complaints filed by Uber against national laws it said are anticompetitive and were unfairly limiting its growth on the continent.

Uber said it hasn’t encountered any push-back against its services so far in Jordan. But it’s not clear if this will remain the case going forward when the company likely tries to expand—a move which could attract greater scrutiny of its business model, especially from taxi firms that pay thousands of dinars for their operating licenses. “It’s yet to be seen if there’s going to be any reaction from the taxis and their union, the Land Transport Regulatory Commission, and GAM,” said Zureiqat.

GAM’s Director of Transport and Traffic Management Ayman Smadi appeared a little wary of Uber’s arrival. “Uber claims to offer some of the missing service qualities in certain markets, but it comes with a lot of controversy, including the use of private vehicles, security, and insurance, to name a few,” he said.

In late March, Uber quickly moved to introduce new passenger safety measures following allegations of sexual assault made against a driver in India. “Safety is our number one priority, and we’re always working hard to improve our safety processes to ensure that we are connecting riders with the safest ride on the road,” Uber said. “We have a zero tolerance approach to instances where rider safety is compromised and we immediately terminate partnerships with these drivers. Drivers are aware of this zero tolerance approach and accordingly the system encourages professional and safe conduct by drivers.” In addition, Uber said all the drivers that they partner with are licensed and vetted by the local authorities, and safety features built into their app allow riders to see the driver’s name, photo, and car license plate before they get into the vehicle car. Riders can also share the route and estimated time of arrival with family and friends.

Fundamentally, Smadi believes the answer to Amman’s transport challenges lay in the better utilization of existing resources, rather than adding more vehicles to the mix. “We believe Amman already has a large number of taxis but more work is needed on upgrading the mode of operation, such as call-in services and stricter driver and vehicle standards,” he said. “Although the regulations are in place to accomplish this upgrade, market forces and fragmented ownership severely handicap more effective services.” Smadi added that GAM was working with a group of transport operators and tech companies to implement a city-wide taxi hailing service that will include navigation and tracking features.

Besides regulatory challenges, another potential hurdle standing in the way of Uber achieving wide-spread popularity is its decision not to accept cash payments for journeys in Amman. All of its competitors do, though. Zureiqat believes this means Uber will not in the immediate term achieve the same mass appeal, or have quite the same disruptive business effect, as it’s had in other countries. “Many people here don’t have credit cards and bank accounts. I don’t think it will reach a critical mass where it will represent serious competition to yellow taxis at this stage,” he said.

On this point, Uber insists it’s ahead of the curve: Jordan is steadily and inevitably becoming a cashless economy, so it believes its digital payment-only stance will win out in the end. “Uber riders all over the world have embraced this system, and we think the fact that we are cashless is extremely valuable. In this region in particular, there is a general trend towards digital payments,” the company said. “With this system, riders don’t have to worry about carrying cash, and can use the same Uber app and payment options in any of the 300 cities around the world that we operate in. So while we are always exploring additional payment options, we also believe that we are at the leading edge of technology.”

There’s no doubt that Uber will find a ready market for its services in Amman, especially among its wealthier residents willing to pay a premium for a little extra comfort and convenience. Ride-hailing apps of its sort are proving incredibly popular elsewhere (Google is now even looking to develop one), and there’s no reason to assume Jordan will be any different. But given that, if Uber ever intends to expand its presence in Amman and push for mass market appeal, it will be interesting to see how successfully this disruptive company will navigate the city’s transport sector, which remains both heavily regulated and dominated by vested business interests.