Hailo and Uber heading the Groupon road
Ripping off drivers is not sustainable, ask the dispatchers — they know best
In the past week I’ve used taxi apps for the first time in my life — Uber in Dublin and Prague and Hailo in Dublin only. I’ve never seen much value in the taxi apps — in Prague the public transport is too good and negates the need, in Sofia I only get a cab occassionally and from one dispatcher — Green Taxi their fleet consists of Priuses with wi-fi on board and the drivers are employees with fixed income and ties — they drive carefully and don’t complain about leasing or commissions.
Every time I ride a taxi I engage with the driver — makes the time pass faster, especially in traffic.
Christopher, the Uber Black driver that picked us from the Dublin Airport in his Mercedes S explained how Uber Black works:
- He alone invested in the car and is now paying its lease
- He alone paid the insurance and the public service permit
- He applied and became an Uber Black driver
For all his efforts, Christopher is being literally, being ripped off by Uber with their 25% cut. They make a small step to remedy this by guaranteeing him at least 25 EUR pay for each hour he’s out there, regardless of capacity.
The taxi companies in Sofia are not taxi companies. They are leasing companies.
They buy cars in bulk and lease them to the drivers. The drivers get better quotes for insurance, wash and tyre services and they get their cars either replaced or fixed in record time in the taxi company service. The taxi companies make extra bucks on all these services plus the advertising — both internal and external and finally — the drivers pay if they want dispatch service.
The drivers are ripped off in this scheme, but they are also very united and use this power to their advantage — to increase prices or fight gas prices increase
With Uber you’re anonymous — the other taxi drivers hate you, you have no leverage when paying your lease, insurance or permit. You don’t have deals for wash and tyres, you fix your own car. You’re completely on your own!
With its tiny fleet in Dublin and Prague it is very hard to get an Uber taxi. Additionallly the app does not support guaranteed pick ups — the ability to specify exact time and date and rest assured that a taxi will be there to pick you up. The airport transfer service in Prague does however and delivers — every time, on time a suited up driver picks you up and drops you at the airport.
Lets take a look at Hailo:
- For all the brains and financing behind Hailo they can only accept registrations from several countries. It took their staff 6 hours during the Summit in Dublin to “hack” the system and register me with fake US number — priceless!
- I tried to hail a Hailo once and it took 6 cancelled orders and 20 wasted minutes before getting in one.
Every time I ride a taxi I engage with the driver… so I asked him “Why?”
Hailo is ripping us off with their 12% cut
He said and then elaborated that the cut was 10%, but got increased by 20% to 12. Additionally, the place I was trying to hail was too busy and the drivers preferred to drop my order and take the full amount from a client that would just hop in - makes sense.
I am not that familiar with the taxi model in Dublin but to me the current situation looks like this: cabs lose precious advertising space promoting an app which gets 12% from a ride that they could get anyway from the dispatcher, whom they pay a fixed fee and is already saved in the phones of all Dubliners (remember from above — tourists outside the few supported countries can’t Hailo)
Lets recap with the worst experience I had in years. An UberPoP streetracer picked me up, raced to my destination, dropped me off 100 meters away since he didn’t fancy my one-way street and spoke no English. I understand him — the fare was 105 CZK ~4,5 EUR, why bother at all?
I believe Uber and Hailo will end up in the Groupon position — loved by the dealhunters and despised by the deal providers. Simply put — there’s not that much value for the driver in the taxi apps, especially if they also pay a dispatcher — they get orders anyway.
The taxi app of the future will replace the dispatcher phone and would concentrate on delivering value to the driver — help him negotiate lease, insurance, permit, tyres, repairs and eventually make a cut on these deals and if possible — sell some in-app, inside or outside taxi ad inventory and make a percentage from there as well. Then Hailo and Uber will end up being despised just as the dispatchers are today.
