Does Ride-Hailing Business Compete with Public Transit?

Ride-Hailing – A Brief History

Ride-hailing is not new as a concept. It is just more than a decade old, and it had its start only when Uber launched its services in 2009 in San Francisco. It has, however, become an integral part of our lifestyles that it is very difficult for us even to visualize the traditional way of waving out our hand at a random yellow taxi to board it not before haggling over prices and with a considerable element of uncertainty on whether or not the driver will except to take us to the location of our choice.

In fact, the Uber model has proliferated both vertically and horizontally. It has prompted a lot of entrepreneurs all over the world to start businesses following the exact similar model and most of them have been successful. Grab, DiDi, and Ola are some of the many success stories of the Uber model. It has also expanded into other verticals like food delivery, grocery delivery, household And handyman services, education, and even dating.

What Makes People Prefer Ride-Hailing?

The COVID-19 pandemic has momentarily brought down the steadily growing market for ride-hailing. 2020 was not the year many businesses expected and the ride-hailing industry was not an exception. However, steady progress has been seen even in the second second quarter of 2021, and the growth is expected to be sturdier and stronger.

The growth can be attributed to the fact that people have now become a bit more inhibited when it comes to using public transport, as it increases the exposure to certain disease elements. People prefer to travel safely and in comfort, especially for business travel. Although there might be a massive decrease in the number of office commuters, the number is expected to be compensated by the number of people who might start using these ride-hailing services if it falls within the spectrum of affordability.

We are not talking monotonously about cars alone when it comes to ride-hailing. There are bike taxis, ridesharing services, carpooling services, and even safe office shuttles that fall into the spectrum.

The Relationship of Ride-Hailing & Public Transport

Ride-hailing is a bit of a Schrodinger’s cat when it comes to its relationship with public transport services. On one side, it is expected to compete with public transport and on the other, it is expected to complement and increase the use of public transport.

How Ride-Hailing Competes?

Although public transport is a more economical alternative, it has its own share of limitations. One of the biggest disadvantages when it comes to public transport is the last mile connectivity. More often than not, you end up in a place where you need to engage in another mode of transport, all walk from the bus station or the railway station to your destination. If you were to consider the entire equation of cost and comfort, it could amount to the same as using a ride-hailing app for your commute.

There have been instances where cities have seen a significant drop in the usage of public transport after ride-hailing was introduced. The biggest contributing factors for this shift in the transportation mode are the significant reduction in the time taken for traveling from one point to another, the quality of service, and the transit coverage. A study in China shows that about 33% of the trips on their leading ride-hailing app are substitutes for public transit.

There is a significant spike in the peak hour engagement when it comes to public transport during which ride-hailing services suffered a considerable drop. However, as the day comes to a close and in the times of the day when public transport is not readily available, the entire transport landscape is dominated by ride-hailing apps.

How Ride-Hailing Complements?

It is not always that public transport and ride-hailing compete. Although it cannot be denied that taxi booking applications have presented a better alternative in many parts of the world, there have been multiple instances of ride-hailing apps complementing public transport services.

It is evident in the study by UC Berkeley that shows about 4% of the taxi rides ended in transit stations. If we were to take this factor into consideration, it is understandable how ride-hailing can help increase the usage of public transit. Some cities have already mastered the art of increasing public transit usage by providing last-mile connectivity through feeder services. If the governments can collaborate with ride-hailing companies, a symbiotic relationship can be developed between ride-hailing apps and public transit. In places where using trains is considered a comfortable, fast, and simple mode of transport, collaboration with ride-hailing companies will prove to be a big advantage.

Outside the perspective of public transit, ride-hailing also provides a safer alternative. As most drivers are quite experienced, the instances of accidents are quite less. It also jettisons the responsibilities of owning a car for many people. A UT Austin study has shown that ride-hailing has reduced the number of fatal drunk driving crashes by about 11%. It is also a great alternative for disabled and geriatric people.

The Basic Features

We are, by now, quite familiar with the way in which apps like Uber work. As you may have known, a taxi booking app like Uber has three distinct apps: one for the driver, one for the passenger, and a dashboard for the administrator.

The passenger app should make it easy for them to perform the most intended action, which is to book a taxi. They should be able to sign up for the services without much hassle, and if possible, should be able to sign up using legacy credentials like Google and Facebook. The signing up should immediately create a profile that shows the details like the usual pick up and drop points, the default payment methods, and the history of the rights taken in addition to the review and rating provided.

To make the process of payment simple, your app should be connected with a versatile payment gateway that can accept payments from multiple payment methods like credit cards, debit cards, Internet banking, and wallets. If possible, your absurd should also have a native wallet that makes it easy to process refunds and make payments.

The GPS should come into play in assisting the driver to precisely reach the location of the user and also in navigating to the destination. It would not be an exaggeration to say that the GPS is the epicenter of the on-demand revolution. The GPS, in combination with a map and navigation, can’t make the entire process of ride-hailing simple, efficient, and easy.

A review and rating system should be in place to keep the entire ecosystem democratic. Not only should you be able to rate the driver for professionalism, but the driver should also be able to read the user based on their behavior.

The drivers look up to these ride-hailing services as an extension of their income all the time, the biggest source of their income. The commission rates should be clearly defined and that should be proper transparency in the processing of payments. The payments made using this payment gateway should be quickly deposited in the bank account of the driver without any delay. The driver should also have a simple onboarding process but should also include a validation and authentication step where they will need to prove that they are eligible to drive the vehicle and that they are the person they identify themselves to be.

The administrator should be provided with the dashboard that will give them a Birdseye view of every aspect of the app. They should be able to see the commercial elements like the total earnings, the active commission rate, the surge pricing statistics, the number of active drivers, the number of active rights, and the payment history. They should be able to remove or suspend users and drivers based on their behavior. They should be responsible for handling customer support and, if need be, should also be able to delegate customer support to the team. They should also be able to handle the content on the app, including but not limited to discount codes.


There’s no question on the fact that ride-hailing is the transportation method of the future because it is on-demand, convenient, economic, and above everything, safe. Since the world has not completely snapped out of the COVID-19 below, it can easily be said that ride-hailing is slowly getting back to normal. Now would be a perfect time for an aspiring entrepreneur to start their own taxi booking app.

Instead of building the app from scratch, you can consider bantering with a company that specializes in white label clones of taxi booking apps like Uber. They will take it to understand a requirement and present it with perfect solutions that can make you ready to take on this wide and open market.