Dear Taxi Industry, Here’s How to Compete and Win Against Uber

You’re welcome.

Earlier this week, taxi drivers in Montreal decided to stage a protest against UberX by purposely disrupting traffic at Montreal’s Trudeau International Airport. This protest led both Montreal mayor and Quebec’s provincial transport minister to react in the most ridiculous way: they have called for UberX to be suspended (whatever that means) until a committee figures out how the taxi industry and Uber can peacefully coexist.

If you read between the lines, it’s pretty evident to see that a couple of our elected politicians are in the pockets of taxi industry lobbyists, but that’s a whole other blog post.

Let’s face it, when given the choice, I myself would pick Uber over a taxi most of the time. The advantages are numerous:

• The smartphone app is very convenient.
• I don’t have to worry about having enough money in my wallet to pay for a ride because the app already has my credit card information.
• I don’t have to worry about tipping and getting receipts.
• I can make the drivers accountable for their service through a rating system.
• I can pick the driver I want if I know the service they provide is good

This kind of service is really making it difficult for regular cab drivers to compete. So instead of being innovative and adapting to the changes in the market, they are instead using shady lobbying tactics to hang on to their oligopoly.

Combine that with several PR blunders that end up punishing the customers that they’re fighting tooth and nail to keep and we see that the taxi industry is pretty close to collapsing. While the recent protest at the Montreal airport did get regulators’ attention, I doubt that the general public, who got inconvenienced, will probably have even less sympathy for the taxi industry.

You can find other examples of the Canadian taxi industry reacting poorly against Uber and making themselves look bad to the public here, here and here.

So what should the taxi industry be doing to survive and regain customers lost to Uber? Here’s what I recommend:

Get with the times

The taxi industry can no longer rely on their old way of doing business. Technology will no longer allow them to pretend that their credit card machines aren’t working and forces the client to pay with cash when they don’t want to or can’t. It’s a question of convenience. It’s much easier to call and pay for your ride using a smartphone, get in the car, get driven and get out. No need to look for your wallet, pull out a credit card, be told that the machine doesn’t work, pull out cash, then calculate change so you give an adequate tip.

The industry also needs to make it more convenient for the client to call a cab. No need to stand around outside and wait for a cab that you can hail. Yes, you can call the taxi dispatch but who knows how long before your cab gets there. Most cabs in Montreal already use GPS trackers in their fleet, so why not go to the next step and let clients track their cab in real time?

What’s also interesting about the Uber app is the transparency it allows the client (or at the very least, it seems transparent). Taxis need to be able to let clients hold their drivers accountable in the same way that Uber does. Better yet, clients need to be able to provide positive ratings and reviews on their driver so that other clients can decide whether they want to ride with a specific driver or not. Again, the industry already has an existing database of all cab drivers in the city. So it’s just another easy step to have a rating and review system.

The industry is making efforts to adapt by using mobile apps, but they need to do a lot better. You can read the poor reviews for Taxi Diamond’s mobile app in the Google Play Store. My suggestion to the taxi companies is that they partner up and hire a company to develop a smartphone app that will allow clients to hail cabs. It wouldn’t depend on who the cab company is, but rather on which cab is closest to the client. Just to give a better incentive, let them all get a cut of the fare if a cab gets called using the app.

Talk about drivers

We are hearing worldwide reports of drivers not being paid correctly for their time, being refused benefits, and generally not being treated fairly by Uber. If I were the leaders of the taxi industry, I would go on a social media campaign (for lack of a better word) and try to highlight Uber’s growing labour issues and dissuade new drivers from entering the field. Examples can be found in articles like this one claiming that some drivers make only $80/week working for Uber.

At the same time, the industry should provide whatever benefits that Uber isn’t giving to their drivers. With the monopoly that they’ve held so long in Canada (at the very least, in Montreal), it shouldn’t be that hard for them to afford it financially. Once those HR policies are applied, I would just use my pull to get articles, blog posts and social media to show how much better cab drivers are treated compared to Uber drivers.

Basically, this will help justify to clients why their cab fare is higher than Uber. It’s a more “ethical” way to get around.

Talk about Uber’s questionable business practices

When UberX started operating in Montreal, the first thing that the government did is raid their office. This was because Uber doesn’t actually pay taxes. If I were the head of a taxi company, I would again figure out a way using social media to show the general public that Uber isn’t giving their fair share. That Uber is taking the tax money that should go back to their local government out of the country. In a place that’s as overtaxed as Quebec, being painted as a foreign company that doesn’t pay its fair share of taxes is definitely not going to win Uber any clients.

I would also talk about Uber’s practice of “surge pricing” and call it what it is, it’s a form of price gouging and profiteering. In what world would it be fair to charge someone $600 for a ride that would normally cost no more than $70 simply because it’s New Year’s Eve? On a less extreme case, just the other day, my fare was double what it should have been simply because the Metro line went down for a half hour. As much as we like to complain about taxis over charging, this a practice that even the shadiest of cab drivers would never have the balls to pull.

If any other industry boosted their prices like this, there would be public outcries and reports to a local consumer’s affairs offices.

Use lobbying to change regulations

Earlier this week, the city of Edmonton has decided to legalize Uber in the city. The terms and rules of engagement seem to be reasonable enough. It can be used as a good template that will allow both services to exist. While the insurance and tax issues might not necessarily be perfectly addressed, this might be a good opportunity for the taxi industry to use whatever pull their lobbyists have to address those issues.

Uber’s ability to skirt the existing laws that exist for taxis is obviously giving them the competitive advantage. So why not just lobby local government to adjust the laws and remove the existing restrictions on the taxi industry? The reasoning that the taxi industry has already provided is that they can’t compete with Uber on price because they have to pay for special licenses and taxes. So why not just use their pull to remove these restrictions, lower the price on the $1.2 billion taxi permits and pass the savings on to the customers?

As much as I like using Uber, I do think that it can be problematic if they manage to put the struggling taxi industry out of business in Canada. Since Uber is the only ride sharing company available in Canada, we do risk replacing one monopoly with another. So for the good of consumers, it’s important for the Canadian industry to get their act together so they can compete in the changing market.