Dubai paves the way for regulating ‘Ride Hailing Apps’
When it comes to regulating the ‘Sharing Economy’, how much regulation is too much?
Seldom do countries all over the world agree on a matter, yet today they all have a common concern: regulating ‘Ride Hailing Apps' which are part of the sharing economy.
Dubai’s Road and Transport authority (RTA) might have just paved the way, as it has unveiled its strategy to regulate the public and private transport sector by putting them all under one roof.
Starting from March next year, RTA will launch an integrated mobility platform which provides customers an easy access to all means of transport.
Careem Networks was the first to cooperate, signing an agreement with the authority. Careem will now provide passenger transport service in accordance with the laws applicable to taxi and limousine services in the Emirate.
And in this regard, Mattar al-Tayer, Director-General and Chairman of the Board of Executive Directors of RTA, said that this agreement will enhance the partnership with the private sector.
This is also what Mudassir Sheikha, Founder and Managing Director of Careem, agreed with, adding that this cooperation will be highly beneficial for his company as it allows Careem to use RTA’s fleet that has a combination of more than 9,800 taxicabs and 4,700 limousines.
But what about other companies that offer similar kind of services, such as Uber?
Al Tayer stressed to Al-Arabiya News Channel that companies providing Ride Hailing services are only allowed to operate within the eHail framework which the authority has established, meaning that all companies providing ride hailing services should sign a similar agreement that Careem has signed.
Not so long ago we heard that Dubai's transport regulator is demanding Ride Hailing Apps - Uber and Careem - to comply with its rules, which include an extra five dirhams per fare surcharge on top of the 30 per cent tariff, but, a senior RTA official denied that.
The tariff, however, will remain even after launching the integrated platform, therefore thinning margins will remain a problem these companies face.
According to the Financial Times, Uber believes that the current price structure and restrictions on owning the fleet renders offering this service in Dubai extremely expensive, which contradicts the goal of the company that is delivering affordable and reliable transport.
Ride Hailing Apps face difficulties in this region, with Abu Dhabi recently suspending operations of Careem and Uber in the capital, and arresting Careem drivers.
Will Abu Dhabi follow Dubai's lead by launching a similar platform allowing Careem and Uber to resume their operations?
And in Dubai’s case, does this mean Airbnb is next?
This question highlights the challenges this region is facing in regulating the sharing economy without hindering it, especially now that the sharing economy is an integral part of the knowledge economy - an economy every Gulf country is aiming to be.