Green-eyed taxi in Kazakhstan

The Antimonopoly Agency of Kazakhstan has launched an investigation into the Yandex Taxi aggregator. The reason: price speculation during the January events. While the press service of “Yandex Go” expresses confidence in a favorable resolution of the situation, and antimonopoly officials continue their investigation, The Tech has prepared for you a research report on the taxi market in Kazakhstan. We will discuss the role of aggregators (Yandex, Uber, DiDi, etc.), as well as their near future.

First, the facts

Statistics from the Republican Association of Taxi Services of Kazakhstan for 2021 indicate 900 thousand trips per day with a turnover of 120.8 billion tenge per year. Despite colossal revenues, only crumbs reach the highest authorities – the shadow market accounts for nearly 95%. On average, there is a constant growth in demand for taxis. The most significant jump occurred in the second half of the 2010s. From 2015 to 2019, demand grew by 79%. We assume that this is due in no small part to the development of various services – but more on that later. The larger the turnover of the taxi market, the more noticeable the problems become and the clearer the prospects appear.

On the dark side

The shadow taxi market is bad. And it’s not just about unpaid taxes (in 2020, official companies lost 1.7 billion tenge). It’s about criminal incidents, lack of guarantees, and inflated prices. The problem is simply difficult to assess because it is impossible to collect any real statistics. Moreover, the same taxi services association, when talking about ways to bring taxis out of the shadows, mainly speaks about methods through aggregators. Among them:

▫️Registration of digital aggregator platforms as legal entities;

▫️Monitoring of pricing;

▫️Regulation of the commission percentage set by the aggregator for trips;

▫️Creation of a Taxi Database;

▫️Introduction of bonuses for officially working taxi drivers (such as the opportunity to drive on bus lanes, for example);

▫️Introduction of requirements for the appearance of taxis.

Why aggregators are great

As can be seen from the proposed regulatory methods, most of them can only work through aggregators. In addition to the fact that an aggregator is a legal entity and is obliged to bear legal responsibility, provide reports on its activities to the state, and mark its vehicles, aggregators constantly face competition, which prompts them to make new offers to customers and improve the quality of services provided. For example, Yandex Taxi introduced automatic insurance for drivers and passengers. Below we will list the main advantages of taxi aggregators:

▪️Reduced waiting time for taxis;

▪️Simplified taxi booking through the app;

▪️Introduction of insurance;

▪️Introduction of cashless payment;

▪️Filtering out unreliable drivers;

▪️Reduced risks of criminal incidents;

▪️Clear service and reasonable prices contribute to the development of foreign tourism;

▪️Implementation of a bonus system, service packages, special tariffs, etc.

There are also their own downsides, but, as we said above, there are certain mechanisms to solve them.

▫️Minimum prices for boarding;

▫️Increased traffic during peak hours;

▫️Monopolists;

▫️Price speculation.

In the future

It is clear that aggregators (especially through mobile services) make a significant contribution to the development of a mobile society. The existence of healthy competition in this environment will help create reasonable prices and make taxis more accessible. Moreover, taxis are already becoming a vital resource for modern people. It is enough to recall how during the January events many were paralyzed not only by the lack of internet but also by the lack of familiar transportation methods. It is not surprising that at the same time, there was talk about introducing taxi services into always-working applications such as online banking. In addition, the need for introducing reasonable regulatory measures for aggregators is obvious. The shadow taxi market will simply die out if online service offerings are more profitable and convenient.