UPDATED: The app battle

Articles, New Projects, The NewsEditor
LU Taxi

From The Guardian:

For years, the London licensed cab driver's badge was worn with pride. Up to five gruelling years spent scootering around the capital learning "the knowledge", plus a full medical, meant the black hackney was driven by the cream of drivers. But now there is insurgency on the block. The digital revolution that has changed so many industries is sweeping the taxi business, possibly putting the very future of the famous vehicle so loved by tourists and Londoners alike under threat.

New smartphone apps like Uber and Hailo have changed the way that people can get around the city. They are convenient, predictable and simple. But apps like Uber also disrupt well-established - and trusted - licensed taxi drivers, no doubt sometimes with a worse service. GrowthHackers has an excellent piece on Uber's international growth (which is worth reading in its entirety). Below is a highlight on Uber's model:

Uber is completely changing the way getting private transportation is done in several key ways. First, their smartphone app is integrated with Google maps so that you can see how far away the nearest cars are, set a meeting point on the screen, and hail a car to meet you there. You can even see your driver’s information (including ratings) as you watch the car get closer to your location. Uber drivers call or text to confirm that they’re on the way, giving you peace of mind that your order was received. Once your car arrives (usually within a few minutes), the driver greets you by name and you hop in. The cars are black cars and SUVs. Uber X, a lower cost version of the service, is made up of a fleet of well maintained sedans. Once you arrive at your destination, the app charges your card, and you’re free to go on about your day. There’s no need to deal with cash, change, tips, or receipts. You just hop out. Uber has removed the friction from the typical taxi cab transaction, and made it highly enjoyable in the process.

But there's more to Uber than changing the customers' experience: a recent study in New York shows that Uber drivers are paid more than traditional cabbies, earning $70k+ compared to the average yellow taxi salary of c$30k.

So what's the issue?

London cabbies are feeling the heat. The Licensed Taxi Drivers Association (LTDA) claims that Uber is in breach of the law as it calculates approximate fares using its smartphone app despite it being illegal for private vehicles to be fitted with taxi meters. TfL does not share their view but has pledged to investigate. As a consequence, they're planning a protest on 11 June, hoping to cause gridlock on London's streets to highlight the issue.

And what about Hailo?

Hailo lets a user order a licensed taxi from their smartphone, supposedly offering many of the benefits of Uber, but using the LTDA's own members to meet demand. For many taxi drivers this has been a dream come true and the Hailo sign is prominently displayed on their doors and windows. However, a recent move by the company has caused anger in the licensed taxi community, leading to the storming of their London offices. Threatened by apps like Uber, Hailo has applied to add private hire vehicles to its roster to more directly compete with the new challengers in marketplace:

Hailo has applied for a Private Hire operator’s licence in preparation to have the full service that passengers and businesses tell us they want. There is no point burying our heads in the sand - people want a choice and taxis need to be in the mix. A taxi-only app will get isolated and customers will take their money to services without any cabs on offer. It is already happening. Let’s win back that work. Individuals who are in denial of this truth are part of the problem not the solution. The worst thing the taxi industry could do now is deny that things are changing and hold onto the past. Complaining is not a strategy.

Hailo does perhaps have a point - they can't compete directly with Uber and its like, so need to broaden their offering. But in doing so they are protecting their own business, rather than that of licensed taxis. One can appreciate why cabbies are feeling betrayed.

What next?

There needs to be clarity over the legal and regulatory structures that govern apps like Uber and Hailo. Cabbies need to know where they stand (although it would appear TfL think that there's no case to answer). And then Londoners need to take a stand. Black cabs won't disappear because of these apps, but their numbers may well reduce - it's happened to their equivalents in the States. Consumers need to decide whether iconic London taxis are something they support and vote with their wallets.

Unnecessary protests won't garner support for licensed taxis - especially if there is no case to answer. Hailo was a great app for moving black cabs into a place where they could compete in the app economy. Now they need to look again at how they can evolve to offer something for consumers that matches Uber's service with their iconic status.

And as for Uber - they have disrupted a market and done so at a cheaper price for users while offering an apparently improved service and pay. More power to them.

London is a huge, global city. Londoners are better served by competition and innovation across the entire transport network - we should welcome the challenge that Uber brings.

UPDATE 29/05: TfL are asking the High Court for a binding ruling on the matter.