Can taxi companies compete with Uber?

You can’t talk about the taxi industry without mentioning Uber. The California-based company, founded in 2009, has challenged the industry in a way never before seen, squeezing current operators and leaving potential new entrants questioning whether or not they should try to compete.

Having launched its service in Chicago in 2012, Uber has gone on to provide taxi rides to around 110 million passengers and now operates in 785 metropolitan areas around the world. 

What separated Uber from the companies that went before it was its use of technology which enabled users to hail a cab via a mobile app. They can see an approximation of the cost of the ride and how far away the taxi is from their pick up point.

 

Effect of Uber on taxi industry

 

As we’ve already mentioned, Uber’s arrival has caused quite a stir throughout the different taxi markets across the world. In the US, for example, Uber is now said to have a 69% market share for passenger transport.

However, in the UK, Uber has not had its all its own way. In 2017, the company was stripped of its London licence on the basis that it was not a “fit and proper” private hire operator. In its decision not to renew Uber’s five-year licence, the Transport for London cited concerns about public safety and security, including a failure to report crimes or alleged crimes to the police, and to conduct proper background checks on drivers.

This prompted the ride-hailing service to make wholesale changes to its operation, which included the appointment of new management in the UK, to ensure full compliance with regulations. Following the sweeping changes to its practices, last year Uber was awarded a new 15-month probationary licence by Westminster magistrates court, much to the dismay of London cabbies.

Shortly after the decision was announced, the Licensed Taxi Drivers’ Association said it was considering taking legal action against Uber because of the loss of earnings drivers had suffered. The body claimed that 25,000 traditional cab drivers suffered lost earnings of £10,000 a year during the first five years in which Uber operated in the capital – when, by Uber’s own admission, its working practices were not up to standard.

According to Uber, about 3.6 million people regularly use it's service in London, where it has 45,000 registered drivers. 

 

Uber continues to make headlines for the wrong reasons

 

Uber’s ordeal in London follows a series of controversies which haven’t made pretty reading as newspaper headlines.

In 2017, UK MPs labelled Uber’s driver contracts as “gibberish” and suggested that the company was “getting away with it” with regards to workers’ rights.

Uber has also had to deal with a number of sexual harassment cases, which saw it fire 20 of its employees following an investigation into the matter during the first half of 2017. 

Even its app – the foundation upon which the business was built – has come under scrutiny. Again in 2017, it was suggested by security experts that Uber’s iPhone app had the potential ability to secretly record a user's screen -- although the company was quick to deny having ever recorded users screens and said that it was working with Apple to close the security loophole.

More recently, in May 2018, Uber's self-driving car killed a pedestrian, with reports suggested that the vehicle “saw but ignored” the individual because its sensors were set to ignore "false positives". The car's sensors detected the pedestrian, but according to Uber's internal investigation into the crash, the car had been tuned to ignore obstacles it didn't deem a risk.

Perhaps it’s unsurprising, then, that in its latest quarterly results (Q1 2019), Uber revealed a $1bn (£790m) loss, despite a 20% rise in revenues to $3.1bn and increase in monthly active users to 93 million.

 

Uber’s competitors

 

Discussing the latest figures, Uber’s Finance Chief Nelson Chai said he had recently seen some less aggressive pricing by competitors, which include arch rival Lyft.

Lyft is perhaps Uber’s biggest competitor, outside of traditional taxi companies. Although it doesn’t yet operate in the UK, Lyft has threatened to for a long time, which would be as much bad news for Uber as it would black cabbies who would see even more of the trade threatened.

Meanwhile, Indian taxi-hailing giant Ola announced last year that it plans to move into the UK shortly. The company, which was founded in 2011, has 125 million customers and is already present in 110 cities, has already come good on its word, operating in South Wales, South West England, Merseyside, Reading and Birmingham (as of June 2019).

Meanwhile, existing taxi companies have taken it upon themselves to build their own Uber-style mobile apps, allowing passengers to book a cab for when they need it.

 

How can you compete with Uber?

 

Given that Uber appears to still be a loss-making business that has been the topic  of  bad headlines, you could make a strong argument that there is plenty of scope to compete with it if you’re a new or existing operator.

It’s a matter of mirroring Uber’s strengths and trying to improve on some of its perceived weaknesses.

For example, the thing that everybody loves about Uber is the user experience of its app and the awareness over how much a journey is going to cost. Traditionally, passengers have had to keep an eye on the meter to see how much they’re being charged per mile.

Plus, when you travel with Uber, you rarely see the same driver twice, so delivering a personalised service and really getting to know your repeat customers could give you the upper hand in your local area.

 

Don’t forget your taxi fleet insurance

 

If we’ve given you the confidence to go ahead and start up that taxi company and compete with Uber, you’re going to need some taxi fleet insurance.

Taxi fleet insurance is available to fleets of three or more vehicles. It doesn’t matter if you have a fleet of black cabs, minicabs, minibuses, or a mix of vehicles – Taxi Insurer can help you find a taxi fleet insurance policy that matches all your needs and covers all of the vehicles in your fleet, for a price that fits.

With only one policy to remember to renew each year, you can put all your effort into making your taxi business a success. Get a no-obligation taxi fleet insurance quote today.

 

Sources:

 

Wikipedia, Business Of Apps, The Guardian, Economist, Marketing Week & Business Cloud