Tapped out Soaring fuel prices, pandemic pains make market untenable for TappCar
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Rising gas prices and market instability have created a bumpy ride for ride-hailing services. TappCar, which five years ago became the first company to offer ride-hailing services in Winnipeg, has headed for the exit ramp.
The company’s local branch shuttered Sunday, CEO Noel Bernier confirmed to the Free Press.
“Between the pandemic effects, the unknown type of recovery we’re going to have from the pandemic, and then, of course, the energy prices… all of it just made it untenable to market or manage a… discount ride-share,” Bernier said.
The Edmonton-based platform launched in Winnipeg in 2018. Bernier was among a local group to acquire TappCar’s Winnipeg branch late last year.
“TappCar had been severely damaged by the pandemic to begin with,” Bernier said, adding the company’s revenue plummeted roughly 95 per cent during the COVID-19 era.
He and his business partners tried to revitalize the company, he said.
“Omicron in December really set things back,” Bernier said.
The company launched Bunnii, an “affordable luxury” delivery service, in January. The start-up carried products from De Luca Fine Wines and Calabria Market, among others. It was to operate in tandem with TappCar and keep drivers occupied.
Bunnii is closing too.
“As we were emerging from Omicron and thinking ‘OK, we’re getting past Omicron,’ the challenges of the energy crisis were like a final blow,” Bernier said.
“TappCar had been severely damaged by the pandemic to begin with.” – Noel Bernier
TappCar was largely made up of part-time drivers spending their own money on gas. In Winnipeg, 350 drivers were employed by the company at its pre-pandemic peak, Bernier said.
In early March, that number was 45 — nearly half of February’s 75 to 85 drivers. Sourabh Shubham, TappCar’s chief operating officer, attributed the decrease to soaring gas prices.
Some customers’ requests would time out because there weren’t enough drivers to accommodate demand.
“If you have a customer, and they’re trying to book a TappCar about two or three times, and (they) get timed out every time, then (they) go to a different company,” Shubham told the Free Press in March.
TappCar had less than 25 part-time drivers this June.
“TappCar can’t recruit drivers anymore — it’s too expensive,” Bernier said.
Being a discount ride-hailing provider means little flexibility in the budget, he added.
“There’s not enough margin in the business to pay drivers more,” Bernier said. “There is no way for drivers to drive with the high gas prices.”
Uber’s arrival also caused employees to jump ship, according to Bernier. The San Francisco-based company followed TappCar into the Winnipeg market in the summer of 2020.
An unpredictable future — with gas prices, with pandemic recovery — means “it was just time for TappCar to hang it up,” Bernier said.
“There’s absolutely nobody forecasting a future where our energy prices come back in line,” he said.
Some thought has been given to selling TappCar’s software, but staff are also considering launching a “safety forward” female-only ride-hailing service using the technology, Bernier noted.
“There’s not enough margin in the business to pay drivers more. There is no way for drivers to drive with the high gas prices.” – Noel Bernier
If the new service moves ahead, he’s recommended that it launch later this year or in 2023, when gas prices have potentially stabilized.
The average regular unleaded gas price in Manitoba was $2.070 per litre Monday afternoon. It jumped past Ontario’s $2.007 and Nova Scotia’s $2.041 — two provinces where gas is normally more expensive.
Last year, Manitoba’s average was $1.292 per litre, 77 cents less than the current rate.
Others in the transportation industry are feeling the pinch.
“You don’t know what to expect next,” said AJ Singh, owner of AAA VIP Limousine Service. “Over $2 of gas is never heard of.”
Singh said it cost $178 to fill up his not-yet-empty stretch Hummer limousine Sunday. An empty tank might elicit a $200 or $225 bill.
“It’s not just the gas– everything has gone up. Spare parts, the mechanic bills, everything. Fare, you can’t double (it).” – Jag Kailey
“We have to fill it up no matter how expensive it is,” Singh said. “We see the gas prices just cutting in on the margins.”
He said he doesn’t have an option to switch to electric. He charges “a little extra,” but too much will cause customers to balk.
Jag Kailey is also finding it hard to balance price increases with keeping clients happy.
“It’s not just the gas — everything has gone up. Spare parts, the mechanic bills, everything,” the Rainbow Limo Service Winnipeg manager said. “Fare, you can’t double (it).”
He sold a stretch SUV limousine just before the pandemic hit with the intention of buying a new one. That isn’t an option anymore, he said.
“It’s not the right time to increase your business,” Kailey said. “It’s just to survive now.”
TappCar closed branches in other provinces earlier in the pandemic, Bernier said.
Gabby is a big fan of people, writing and learning. She graduated from Red River College’s Creative Communications program in the spring of 2020.
Updated on Monday, June 27, 2022 8:20 PM CDT: Corrects term, ride-hailing service