“The service is economical and the frequency is good. I can use the time to make calls or read,” said Wadha, adding that he met his fiancée on a Shuttl bus two years ago. Drive around the IT parks in Bengaluru or Pune and you’re bound to come across a Routematic-branded cab or a Shuttl bus.
“Shuttl is the organised and much-improved version of chartered bus services. It is built on technology and data – the routes, pickup points and time slots are designed on the basis of customer feedback and the discoverability of these routes is solved through the consumer app,” said CEO Amit Singh.
Shuttl also has a sound authentication system, home check and ride-sharing features, which make it the safest way to move within the city, Singh said, adding that all this makes up for better consumer experience and shifts people from cars. Gurgaon-based Shuttl operates in eight cities in the consumer and enterprise segments and does 60,000 rides a day. It raised $11 million from Amazon and Dentsu Ventures in July.
IT Employees Primary Customers
Earlier, ZipGo, an on-demand AC bus service for daily commuters, raised $43 million from the Essel Group. These companies cater to a specific segment of the transport market: daily urban commuters. Their primary customers are employees at IT companies. Experts estimate the current size of the urban commute market in India’s top cities at between $8 billion and $12 billion.
Enterprise spending accounts for almost 90% of this segment and many operators focus on working directly with companies. This means they are likely to turn profitable soon, unlike the consumer mobility segment, where cab aggregators Ola and Uber operate with deep discounts.
“When you are working with enterprises, the process has to be safe, reliable and auditable and this is where bringing in tech-enabled solutions helps,” said Surajit Das, chief executive of Routematic, a Bengaluru-based fleet service provider.
Gaurav Agarwal, chief technology officer of ZipGo, said the company has worked hard to ensure that cash-burn rates remain within a fairly low threshold and that it is on the route to profitability.
According to an industry expert, buses will become profitable when they operate at full or near-full occupancy, which would be possible only at peak times. Shuttl and Zip-Go have developed strategies to achieve profitability.
“We focus route by route, starting with a certain number of buses and adding more only over time once it operates at a certain level of occupancy,” said Agarwal of Zip-Go, based in Gurgaon.
At Shuttl, the operational focus is on ensuring that it accurately predicts – and meets – demand for its services and provides them with guaranteed pickup and drop times.
Das said the target segment was the office-goer who typically makes 14 trips a week, of which 10 would be daily commutes. “This presents a significant opportunity,” he said. Routematic offers fleet management solutions to companies, matching riders based on the company they work for, or people commuting to the same locality. It does almost 60,000 trips a month in Pune and Bengaluru and aims to be in five cities by the end of 2019.
However, there has been some uncertainty about the legality of such services in some states. According to Narendra Holkar, secretary of the State Transport Authority in Karnataka, no licence has been given to private app-based bus aggregators to operate in Bengaluru.
“If they are running in the city, it is against the law. Only BMTC (Bangalore Metropolitan Transport Corporation) has permission to provide such services in Bengaluru,” he said. Private operators, he said, have not given any representation.
Gnanendra Kumar, joint commissioner (enforcement) in the Transport Department, said it would act against such service providers only if a complaint is filed. “I have not got any complaint from the public. If we do, we will start confiscating their vehicles,” Kumar said.
Though still an emerging segment, consolidation has already started, with small operators folding up. Shuttl, in collaboration with UAEbased Careem, acquired Hyderabad-based Commut, which operated in the same space. ZipGo recently bought Supreme Trans Concepts, a Pune-based provider of bus services, and chief technology officer Gaurav Agarwal said the company was looking for more such opportunities in other cities.
“We’re present in six cities and are currently not looking at adding more cities,” he said. “The challenge is to run the system efficiently. If occupancy drops, then you lose more money, so it’s important to build this in a sustainable manner,” Agarwal said.
Technology often ends up as the key differentiator between companies that have lasted this long and those that have wrapped up operations quickly. That apart, the stated goals of these companies include reducing the number of private vehicles on the road and going green.
Lithium Urban Technologies offers electric cars to companies to transport their employees and currently operates 600 vehicles in four cities. “In urban commutes, the routes are known beforehand and so it is possible to set up the charging infrastructure at certain places. Also, since these contracts are typically over a few years, financing it becomes possible,” said Ashwin Mahesh, cofounder of Lithium Urban Technologies, on the two key hurdles in operating electric vehicles.
Routematic plans to make 30% of its fleet electric by March.
(With inputs from Naveen Menezes)