Hasta la vista, Ola: TfL bans ridesharing startup, claiming unlicensed drivers picked up passengers
Softbank-backed firm may yet appeal London transport authority decision
Transport for London (TfL) has refused to renew the licence of the Indian ridesharing startup Ola, after the discovery of what it described as "potential public safety consequences".
The authority identified several issues in Ola’s operations, including what TfL claimed was the use of unlicensed drivers and cars in over 1,000 passenger trips.
Helen Chapman, TfL's Director of Licensing, Regulation and Charging, said in a statement sent to The Reg:
Our duty as a regulator is to ensure passenger safety. Through our investigations we discovered that flaws in Ola's operating model have led to the use of unlicensed drivers and vehicles in more than 1,000 passenger trips, which may have put passenger safety at risk
If they do appeal, Ola can continue to operate and drivers can continue to undertake bookings on behalf of Ola. We will closely scrutinise the company to ensure passengers safety is not compromised.
Ola, which has raised $3.8bn from investors that include Softbank’s Vision Fund, plans to appeal the decision. As with Uber, while that process is in motion, Ola can continue to accept bookings in the capital.
This latest ruling is not believed to impact Ola’s activities in other UK cities. Ola landed on Blighty’s shores in 2018, starting operations in Cardiff, before expanding to other cities, including Liverpool, Manchester, and the West Midlands. It is a relative latecomer to London, entering the market in February of this year, just before the onslaught of COVID-19.
Ola has attempted to differentiate itself from Uber in terms of cost and safety; fares are lower, as it typically takes a smaller cut of driver revenues, and the app has features like “start codes” that allow passengers to ensure they’re in the right vehicle. You could reasonably question how useful those codes are, if TfL's reckoning is correct that some vehicles in their fleet didn’t even have a proper licence.
Marc Rozendal, Ola UK managing director confirmed it plans to appeal the licensing decision at a magistrates’ court.
“At Ola, our core principle is to work closely, collaboratively and transparently with regulators such as TfL. We have been working with TfL during the review period and have sought to provide assurances and address the issues raised in an open and transparent manner. Ola will take the opportunity to appeal this decision and in doing so, our riders and drivers can rest assured that we will continue to operate as normal, providing safe and reliable mobility for London."
The situation is the latest in a string of bad news stories for India’s largest ridesharing firm. It laid off nearly 1,400 employees in March after revenues dropped by 95 per cent in the face of coronavirus-induced economic shutdowns. This preceeded similarly substantial redundancies in other competing firms. Uber, for example, handed out nearly 6,700 pink slips worldwide in the month of May alone.
The ruling also coincides last week’s decision by a judge to overturn TfL’s ban on Uber, in turn granting the US taxi app ridesharing giant a 18-month licence. TfL first declined to renew Uber’s operating licence in 2017, and again in 2019, after it deemed the company not “fit and proper.” ®