Careem to launch intercity bus service

KARACHI: It appears that reports about Careem’s much-expected bus service had either been misconstrued or the company had a change of heart recently as the popular ride-hailing service is planning to enter the intercity transport market with its bus service instead of the intracity market, where Airlift and SWVL have already gained a somewhat first mover’s advantage, sources informed Profit on Tuesday.

This development may come as a major disappointment to customers who were waiting to benefit from the increasing competition in the sector.

Sources said that there are solid reasons behind Careem’s plan to not enter the intracity market. One of the important ones, of course, profits – or lack of them. Apparently, the intercity market is not lucrative enough for the Careem to enter at the moment. Airlift and SWVL are already locked into a fierce competition. The average trip fare being charged is not quite lucrative as it is, and more competition in the market would generally mean that it will stay that way – if it does not drop any further.

In the intercity transport market, fares are high and the routes are simpler, and therefore, it makes more business sense to enter that market. The intercity transport market has established players too (Daewoo, Skyways, etc.) but Careem seems more willing to take them on. Besides, Careem plans to compete on the quality of service and not on price in that particular market, anyway. It believes that compared to the other players there, their “smart buses” offer a much better service to the intercity commuters.

Another reason for not entering the intracity market is that there are concerns that Careem may end up cannibalising its own market share if they introduce the bus service there. After all, the consumer who now has the choice to take Airlift or SWVL for his daily commute is the same consumer who was once relying on Careem or Uber for the same purpose.

Profit tried to reach out to Careem but they neither confirmed nor denied the news.