Gasoline prices are on the rise. Very matching with the gas. A problem that comes from even further than the question of the war in Ukraine. We have been dragging this problem for a long time. The answers are not long in coming, mainly in the platform business. unanimously, all the companies in the ecosystem have raised the prices of their journeys. For Bolt, and in the words of Daniel Georges, director of VTCs and taxis of the company, hypertextualis a necessity that they have seen in order to continue maintaining viable operating margins.
Bolt, the Estonian VTC and taxi company that has been operating in Spain since July 2021, was the first. A month ago specifically. They made the drastic decision to increase prices by between 10% and 15% for each journey. The minimum went from 3.50 to 4.50 euros (30% more), the price per minute went from 0.10 to 0.13 euros, plus an extra 0.50 euros per trip.
They are not alone, Uber increased the journey by 0.50 euros. First in the United States for all its services, including Uber Eats, and days later in the rest of the regions only for passengers. Cabify, the Spanish version of the sector, had not shown signs of life. Now we know, according to what is pointed out by the technological hypertextual, that journeys will increase, on average, by 0.65 euros. The measure, in fact, has been active in Madrid since yesterday and in the coming days it will be extended to the rest of the cities in which the banner is operational. The cause? The same as all: the price of fuel. The objective? Also make the service more sustainable and profitable for all parties.
And it is that beyond Bolt, Uber and Cabify, the transport sector with passengers, taxis and VTC, is on a war footing. Especially the one in the taxi. Along with the merchandise strike and the demonstrations from the world of fishing, livestock and agriculture, now a new player is added to the game. The situation with fuels is close to reaching its maximum. So much so that the sector has already announced that next Sunday it will join the manifestation to put pressure on the government of Pedro Sánchez to speed up measures to alleviate high fuel costs.
The problem of Bolt, Uber and Cabify is not only with gasoline
“Gasoline is in all the headlines, but there are no problems in several areas,” Georges tells hypertextual. The problems for the passenger transport sector, mainly in the VTC sector, They have a much wider range of options.. One that they have been dragging long before the fuel crisis.
There are no cars, but there are no drivers either. The first has its origin in the shortage of chips. Few cars are coming onto the market for normal users, and the same precarious number for a sector that is limited in terms of models and features. With less incidence in the VTC than in the taxi -the latter have strict requirements-, Uber, Cabify and Bolt drag the same problem. As is the lack of manpower.
In fact, right now the competition season has been closed due to the few drivers and operational cars. Bolt is attracting the eyes of a sector that is carried away by the highest bidder. And he is doing it with a strategy that is not new: lower operating commission prices, with offers for users. Result: in just 7 months that they have been operating with VTC in Spain, they have gone from 1,000 to 7,000 partners. Figures that exceed, in some regions, those of Uber and Cabify.
In spite of everything, and although its associates are increasing, the problems accumulate at the doors of the technology. “A general inflation with rising salary costs could endanger the business model of Bolt and its partners,” explains Georges. In other words, the increase in prices per trip due to the price of gasoline is not only to save drivers. This crisis is putting a sector in check in which intermediaries have to present a compelling margin to your investors. In the case of Bolt, for those 628 million euros that he raised earlier this year from Sequoia Capital and Fidelity Management & Research Company LLC, among others already active in the Estonian capital.
The measure, which they defend as a well-studied and well-founded decision, is not clear for how long it will last. Uber took about 60 days to study the market and expand its margin if prices did not relax. Bolt prefers to stick to the mantra, which almost never fails, that prices rise fast but take a long time to fall. And despite the fact that they trust the measures that are to come from the hand of the Government, they do not want to make forecasts.
Even so, they are aware of one fact: “If inflation is not controlled in the medium term, and we are forced to adjust prices, this will have a negative effect since prices cannot be affected without affecting demand.” A demand that, at the moment, is on your side. With higher revenues for co-drivers, Bolt is drawing attention from an industry that is sold to the highest bidder. The more drivers, the more offer. And the more supply, the more availability for users who want the faster service and who, at the moment, are not sensitive to price increases. For now, of course.
And what do we do with the taxi
For some time now, and with a more than limited availability of VTC drivers, the sector of mobility platforms with passengers has resorted to a business in which the only thing that is not lacking are cars: taxis, Uber, Cabify and Bolt , with the help of the regulations that allowed the closed price on journeys, allowed the taxi to enter its platforms.
What happens with the rate changes for this sector? They do not apply, since the room for maneuver is limited. And yet, the effects are the same as in any sector that has fuel as its base. In the case of Bolt, the eggs have been put in the Government’s basket: “The lowering of fuel taxes so that they can mitigate the impact.” Precisely the reason that has articulated the demonstration next Sunday.
In the long term, they also have a lot of faith in the regional regulations that equate the VTC activity to that of the taxi and allow greater flexibility in rates and activity. In the case of Madrid, where the Community of Madrid of Isabel Díaz Ayuso has circumvented the limitation of the Ábalos Law, the new regulation is already in the draft phase. One that, according to Georges, points to “if something isn’t broken, don’t change it.” The same that they intend to influence other communities. Andalusia specifically and also led by the Popular Party. And one that follows the recommendations of the European Union that advocates free competition and eliminate operational barriers (pre-contracting systems and return to the operation bases between services) which are what Barcelona defends at this time.