Ride-hailing giant Uber is expected to relaunch operations in Israel, bringing back its booking platform to hire licensed taxi drivers only, some five years after a court blocked the company’s initial activities in the country.
Uber will return to Israel by connecting to a nationwide network of licensed taxis, Reuters reported Tuesday, building on expansion plans that include Spain, Italy, Germany, Austria, Turkey, and South Korea.
The company told Reuters that thousands of Israeli taxi drivers have joined the cab-hailing service, which will also include ride-sharing options with other passengers, mainly in Tel Aviv and Jerusalem.
Uber will compete for Israeli passengers and taxi drivers with Israeli-founded Gett (formerly GetTaxi) and Russian taxi-hailing service Yango (owned by Russian internet company Yandex), both of which work with licensed cab drivers and are well-established in the country.
“We want to use technology to turn taxi services, working with other public transportation services, into the alternative to the private car they can be,” Gony Noy, the new general manager of Uber Israel, told the news agency.
Noy previously served as general operations manager of Uber Freight, an Uber service launched in 2017 that offers data tools to carriers and shippers.
Uber was forced by court order to largely stop operating in Israel in 2017 because it used private drivers, who were not licensed to drive taxis and lacked appropriate insurance for passengers — essentially the bulk of the company’s initial business model. Uber collects fees from each booking.
Israeli law does not allow drivers who lack an appropriate license to pick up passengers and charge for rides, as many Uber drivers do in more than 10,000 cities around the world (as of 2020).
Uber operated in Israel for a number of months in 2017 before a Tel Aviv court handed down an order to stop, partly amid pressure from taxi unions and licensed companies (like Gett) who filed a complaint with the Transportation Ministry.
Uber kicked off its entry into the Israeli market at the time with a pilot program called Uber Night service, which allowed private car owners registered with Uber to drive other passengers during night hours when public transit was not available, as The Times of Israel reported. The pilot has only been running in Tel Aviv and just on weekends.
Instead of the typical charge app users were required to pay, the fee was referred to as a “reimbursement” and covers drivers’ expenses, such as gas. Uber charged drivers a 25% commission.
It was the company’s way of getting around Israeli law.
The program resembled Uber X, the company’s most popular service that allows passengers to order rides from registered drivers at typically cheaper prices than taxi services, and to ride-share with up to three other passengers.
The practice led the Transportation Ministry to launch an investigation and file a complaint against Uber for operating without the required licenses.
Separately, Gett hit a choppy in May when its expected merger with a NASDAQ-traded SPAC (special purpose acquisition company) was canceled over “recent market volatility” and its valuation — once at $1 billion — plummeted.
The company was valued at about $265 million in May, according to a report by one of its biggest investors, VNV Global, according to a Calcalist report.
Gett’s founder and CEO, Dave Waiser, left Gett that same month, following over a decade at the helm.
Gett withdrew from the Russian market weeks after the country launched its invasion into Ukraine on February 24.
Gett has raised about $850 million since its founding in 2010.