Can bike-taxis solve big-city connectivity issues and ride their way to success?

Gurgaon-resident Kaushik Nath’s daily commute to work and back is primarily spent stuck in traffic, just like many other office goers in Indian cities. “Beating traffic during office hours is like winning gold at Olympics,” says Kaushik, 28, who works at a multinational company on Gurgaon’s Sohna Road. He lives in DLF Phase II, at a distance of over 10km from his office. He has tried using on-demand cabs, autos and shuttle services, to no avail. That changed a few days ago when he used the services of a bike-taxi service. “The time taken has reduced by half,” says a thrilled Kaushik.

Traffic and traffic jams have become a daily affair in India’s cities. Memes showing sleeper bus shuttle services between locations within a city is a hilarious take on this sad reality. Bikes, which can weave their way through traffic, being used as taxis seems like a no-brainer and a couple of startups offering this service were launched a week ago in Gurgaon.

While cities like Mumbai have banned such services due to regulatory concerns, the Haryana government has allowed bike-taxi services under state contract carriage permit.

“Last-mile connectivity is a huge pain in Gurgaon. About 200,000 professionals travel to and within Gurgaon everyday for office and business meetings,” says Arunabh Madhur Founder and CEO of M-Taxi, on the opportunity he saw for this service. M-Taxi and another bike-taxi service provider Baxi launched their operations in Gurgaon in the first week of December.

Baxi’s Co-founder Ashutosh Johri says the broken public transport in Gurgaon, Noida and Faridabad adds to the commuters’ woes. “We want to change the face of last-mile connectivity,” he adds.

Currently, M-Taxi claims to do over 40 rides and Baxi over 140 rides daily. Baxi has a fleet of 23 bikes, while M-Taxi has an inventory of 10 bikes and plans to add 100 bikes more in a couple of weeks. The companies intend to move to a marketplace model, but have started off with inventory to ensure smooth operations. They are affordable too, compared to taxi-hailing apps. The bike taxis charge Rs 25 for the first three km and Rs five for every subsequent km. Ola Mini, the cheapest service offered on the platform, charges Rs 100 for the first four kilometers and Rs eight for every km after that and Reone for every minute. M-Taxi limits rides to 10km, while Baxi has no such limits.

Experts see last-mile personal transportation as a massive problem in metros and other cities and believe that addressable market is as big as $five billion. Alok Goel, Partner at VC firm SAIF Partners, says,

On-demand, two-wheeler taxi service seems to be an interesting model. Last mile is a big pain for masses in the top five cities and bike taxis can be convenient, affordable as well as efficient mode to commute for people in big cities.

However, regulations that vary from State to State can become roadblocks. Prior to M-Taxi and Baxi, Mumbai-based Hey Taxi had started a bike-taxi service in some parts of the city. However, the Mumbai Regional Transport Office suspended the service stating that operating a two-wheeler taxi service does not fall under the Maharashtra Motor Vehicle Rules. The government body also says that the city currently didn’t need motorcycle taxi services.

At present, Hey Taxi operates as a ridesharing platform and also offers on-demand parcel delivery. The company allows customers in South Mumbai localities of Mahim, Dadar and Colaba to arrange parcel, package and envelope deliveries up to five kg within a vicinity of 10 km. It claims to do over 50 deliveries on a daily basis. Manoj Maheshwari, Co-founder of Hey Taxi, says,

We are in discussions with government stakeholders to formulate concrete guidelines in Mumbai (for bike taxi services)

He plans to launch the service in Gurgaon early next year.

Interestingly, Baxi and M-Taxi had secured seed round of funding before launching their operations. According to a source with direct knowledge of the deal, Baxi bagged about Rs 10 crore in an angel round. M-Taxi has raised an angel round of between $400,000 and $500,000. Both companies declined to confirm the funding.

Motorcycle taxis are an extremely widespread mode for last-mile connectivity in notoriously congested cities like Jakarta in Indonesia. It’s also widely popular in China and Vietnam. Go-Jek, Blue-Jek and GrabBike, a unit of Didi Kuaid-backed GrabTaxi, are major players in the Indonesian market. Besides rides, Go-Jek also offers hyperlocal deliveries along with other services like intra-city parcel movement for businesses and individuals.

Authorities in India are beginning to recognise the need for such services. Saurabh Singh, Joint Commissioner of Police, Gurgaon, says:

Motorcycle taxis are bringing in smart solutions to ease the last-mile connectivity challenge for the daily commuters in Gurgaon. This mode of transportation fills an important gap in the transport landscape while delivering on aspects such as safety, security and transparency in their dealing with the commuters.

Baxi has got approval to roll out the service in other cities in Haryana including Faridabad, Panchkula and Bahadurgarh.

While the opportunity is big, these fledgling startups need to be prepared for increasing competition. Like GrabTaxi has done in South East Asia, Ola is reportedly working on plans to launch on-demand bike taxi service. The media reports also suggested that the Softbank-funded company will have UberRUSH-like offering to deliver shopping orders like flowers, baked goods, laundry and ice-cream to consumers’ doorsteps in less than three hours.

YourStory take

Last-mile personal transport is indeed a major hassle in all major Indian cities. Existing solutions like on-demand cab services do not solve the problem of time wasted stuck in traffic and are as expensive as daily commute solutions. Autorickshaws, the more affordable alternative, in most cities, do not follow the meter and commuters end up coughing up higher fares.

On-demand bike taxi services appear to be a viable option to beat traffic and save time. The initial booking numbers for Baxi and M-Taxi are promising. However, adverse State regulations have the potential to put the brakes on their expansion plans. The regular cab-hailing app companies like Uber and Ola are still dealing with regulatory issues. However, stakeholders like Jairaj believe that other State governments will take their cues from the Haryana decision. If they do, India could well have a vibrant bike-taxi industry like Indonesia and other parts of South East Asia and commuters will have an affordable and reliable transport service that can beat traffic.

Baxi & M-TAXI