Metro effect: Vehicle rental sector in a fix

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By Shafaat Ahmed  www.khaleejtimes.com

DUBAI – As it happens with many things in life, one person’s gain could be another’s loss. The popular adage seems to hold true for many of Dubai’s car rental and passenger transport companies as they grapple to cope with the success of the metro.

Dubai metro
Dubai metro

Even as the metro has brought relief to millions in the city, it surely hasn’t gone down well with these firms. According to the industry sources, passenger transport firms have lost at least 40 per cent of their business to metro.

“Many people who earlier used our services have opted for metro, especially women. It is cheaper, safer and faster for them. We have lost around 40 per cent of our business since the launch of metro in September last year,” said Sathyanath Manikurg, who is the Operations Manager at Fancy Passenger Transport.

While he says that the slide had begun much earlier, thanks largely to the current economic recession, metro added to their woes.

“Our corporate contracts are more or less going steady, similar to last year, but we have incurred losses at regular passenger business. At one point, we used to have our Dubai-Jebel Ali or Sharjah-Jebel Ali buses packed, new even the Sharjah buses are running almost empty,” added Manikurg, who has been running the show for Fancy Transport for the last 15 years.

Syed Akeel from Pakistan, who co-owns Al Sadat Transport, has a similar story to tell. “We have altogether stopped the regular passenger service, because there is hardly anyone to pick, and our corporate business is not much to cheer about either. We have a fleet of 200 buses of various capacities, but only around 50 of them are currently running,” said Akeel, who has been running the rental business since 2002.

Akeel says it was all going hunky-dory till September 2008, when suddenly things started to fall apart. “It began a year before the advent of metro, one by one we began losing contracts, and metro has only accelerated the process,” he added.

This, he says, despite several valiant attempts to stem the slide. “We would have shut the shop by now if we hadn’t been a bit smart with our prices. As things began turning bad, we very quickly began slashing our prices. That’s the reason we are still surviving.”

A 14-seater wagon could be hired for Dh3,000 per month as opposed to almost double the price two years ago, while a 32-seater bus could be rented for as low as Dh50,000 per annum.

Even the individual shuttle charges for passengers have dropped significantly. “We had our buses full even when our individual monthly charges for Sharjah-Jebel Ali trips were as high as Dh1,000, now we offer the same services for anywhere between Dh600 and Dh700, still only six-seven seats are occupied on each trip,” said Manikurg.

However, not all vehicle rental services are experiencing a downturn. As opposed to the general perception, car rental firms have done steady business — at least as good as it was before 09.09.09 if not better. In some cases, they have even bettered last year’s performance.

With a fleet of 7,000 vehicles of different makes, models and sizes at its disposal, Fast Rent-A-Car is one of the UAE’s biggest car rental firms. According to its senior officials, the company has actually witnessed a rise in demand for car rental since the launch of metro, which was even contrary to their expectations.

“We had expected a slide in demand for car rentals with the launch of metro and we were prepared for it, but instead our business has improved remarkably in the last ten months or so, which was quite surprising,” said Sameer Abdul Rehman, sales manager of Fast Rent-A-Car. Confident after witnessing 25 per cent growth since the launch of metro, Sameer feels there is scope for every mode of transport in Dubai and says even the opening of more stations and the Green Line of metro won’t change much.

“Passenger transport firms have suffered and are likely to suffer more. Since we deal only with contractual car lease, we have done well so far. We cater to a segment of the society which will continue to use cars,” added Rehman. However, he adds that there could be a slight bearable drop in the future.

Unlike big firms like Fast Rent-A-Car, which have weathered the metro storm admirably, small car rental businesses have expectedly been sucked in by the whirlpool.

“As it is, recession was not doing any favours to us and business has been slow since mid-2008, but with metro’s popularity rising, fewer passengers are knocking at our doors,” said M. Rasheed of Gold Star Rent-A-Car LLC.

Rasheed added that the demand for car rentals has come down by 30 per cent since late last year.

The rental and private transport industry apart, Dubai Metro has indeed brought smiles to hundreds of thousands of faces within a short period of time through its efficient shuttling across the city. With around 120,000 commuters daily, metro has proven to be a resounding success and more could be expected as new stations are waiting to open and the second line getting ready by August next year.

We could get a few thousand voices to testify to the fact. Here are a few booming voices who are the proud users of the world’s longest driverless rail network:

“I used to pay Dh700 monthly to my transport provider for travelling from Rashidiya to Jebel Ali and it used to be a very long and tiresome journey. Now I pay much less and I feel it’s both safer and quicker,” said Marie Gonzalvez, who works as an office assistant at a textile firm near Ibn Batuta Mall.

Ahmed Saleh, 35, is an IT consultant, whose most clients are located at Dubai Internet City (DIC). He became one the latest residents of Dubai to give up on his rented car, which used to cost him Dh1,500 per month.

“I live in Garhoud and mostly work at DIC, it used to be a daily grind of around 40 minutes, plus Salik and car rent. I gave it up all one recent morning,” said Saleh, who is happy to walk for ten minutes to his nearest station — the GIGCO station — in Garhoud.

Even though he is at the wrong end of the equation, the seemingly large-hearted Manikurg bears it all with a smile. “The trend may not be very encouraging for us but it is good for people, so many people now have an affordable and faster transport option, even I use it occasionally,” he quips.

shafaat@khaleejtimes.com