Kater to launch ride-hailing service in B.C. by end of March

Kater Technologies Inc. CEO Scott Larson | Photo: Tyler Orton

What happened: Kater Technologies Inc. has announced plans to launch ride-hailing services in B.C. in March

What it means: The Surrey-based tech company gets a first-mover advantage over incumbents Uber Technologies Inc. and Lyft

Regulated ride-hailing services are set to hit B.C. roads for the first time by month’s end.

To make the most of a first-mover advantage, Surrey-based Kater Technologies Inc. plans to begin a phased rollout in Vancouver “around March 30,” according to CEO Scott Larson.

While Uber Technologies Inc. and Lyft are not able to operate in the province under current rules, Kater struck a deal last year with the Vancouver Taxi Association (VTA) to secure taxi licences for the tech company’s own fleet of vehicles.

“In order for us to be able to launch, get into the market and start to provide the service that we think Vancouver desperately needs, this is the only way to do it,” Larson told Business in Vancouver.

“We think we’re able to take the best of both [taxi and ride-hailing] models and offer kind of a hybrid solution that Vancouver really needs.”

The arrangement sees the VTA flowing 140 newly acquired taxi licences directly to Kater, which will in turn pay out 20% of profits to the association.

Kater is hiring its own drivers with Class 4 licences to operate its own fleet of hybrid vehicles, while the VTA remains hands-off from the company’s operations.

Larson said all 140 vehicles will be operating “24-7” once the phased rollout is complete, adding the company has so far received 900 driver applications.

The B.C. Ministry of Transportation and Infrastructure said in a January statement it was working with a provincial regulator to ensure all current requirements are met, “including a regular, government approved safety inspection of the vehicles, insurance that will cover the carrying of paying passengers and compliance with licence boundaries and other requirements until the fall of 2019 when new regulations will come into force that will allow ride-hailing companies to enter the market.”

The province has come under fire for its slow rollout of ride-hailing services, and Vancouver remains the largest city in North America where Uber and Lyft do not operate.

The B.C. government tabled legislation in November 2018 that would introduce insurance products for ride-hailing companies by fall 2019.

But beyond the introduction of insurance products, Transportation Minister Claire Trevena would not commit to a specific date for launching services.

Instead, she said that burden would fall on the cabinet-appointed provincial regulator, the Passenger Transportation Board, to approve any applications for ride-hailing services like Uber or Lyft.

Uber and Lyft have not struck any deals like Kater’s to acquire taxi licences in B.C.

Meanwhile, VTA spokeswoman Carolyn Bauer told Postmedia News in January that former BC NDP cabinet minister and party president Moe Sihota was the one who introduced her association to Kater founder Monty Sikka.

“Saying Kater, which truly is a small startup company based here in Vancouver, has an advantage over companies that are valued in the tens of billions and have unlimited resources, effectively, would probably be a bit of a stretch,” said Larson, a serial tech entrepreneur who co-founded Helios Wire and UrtheCast Corp. (TSX: UR) before joining Kater last fall.

“But being able to get launched, get some traffic, get some local knowledge, build that up, we think it’s good.”

He said from a financial standpoint, putting a car on the road where there is massive demand will generate cash flow easily.

“So as long as you manage your rollout in a phased approach, execute somewhat strategically, keep the mistakes to a minimum — the business model works,” Larson said.

The company is currently accepting applications from prospective passengers on its website and will choose a select number to download its mobile app for the initial rollout.

Ian Tostenson, president and CEO of the Ridesharing Now for BC advocacy group, said he’s held one meeting with the team from Kater and is wishing them luck as they enter the market.

“It’s bold what they’re doing, but I just think it’s really tough,” said Tostenson, who is also president and CEO of the BC Restaurant and Food Services Association.

“We’re essentially adding to the taxi pool with a brand called Kater and an app, which will probably work [similar] to true ridesharing. But what it doesn’t address — and this is no fault of Kater — is the fundamental ability for a system to expand and contract like an accordion to consumer demand.”

Uber and Lyft hire drivers choose their own hours and use their own vehicles to transport passengers across different municipal boundaries.

The companies are also known for offering variable pricing to passengers based on demand at different locations and times.

Kater will not deploy surge pricing.

Passengers will pay the same rates as they would for a taxi and payments will be made directly through the app.

Kater’s fleet features white hybrid vehicles decked out with the company’s name and logo, along with a taxi sign behind the windshield.

Unlike taxis, Kater cars can only be hailed through the app, not from the street.

While the made-in-B.C. service will launch in Vancouver during the first phase of it rollout, Larson said the goal is to acquire more licences and expand into more jurisdictions.

He said Kater has already been asked to enter markets in other parts of Canada and North America.

“And we think we can take a similar model, actually, to certain other countries around the world,” he said.

Update (March 21): In an email to BIV, Tostenson said the following statement better reflects his position on Kater's entry into the market: "A taxi service with an app operating under taxi rules and restrictions is not true ridesharing."

torton@biv.com

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