Protectionism meets the free market… again.
Did TFL miss out in transforming Black Cab utilisation using Hailo? I fear Google will cause their demise in the taxi revolution.
We all stopped talking and looked out of the window last year as one of the new Route Master buses drove past us near Angel. Two grown adults excitedly tried to explain to two small children how wonderful they were, and now whenever they go past the children jump up and down and point. The legend lives on…
So I look at the current dispute being brought to the courts by the Licensed Taxi Drivers Association (LTDA) on behalf of Black Cab drivers with a small sense of worry. The last thing we need is the slow demise of this strong international brand to the point where in 20 years at vast expense we pay to return them to our streets, just like we have done with the Route Master.
So what is the real cause of the problem?
The Black Cab dispute is a classic example of a protectionist union driving up wages to a point where the free market finds a way to make it cheaper for the customer. After all, why are customers choosing to use Uber? Convenience and Price — the LTDA needs to help its members find a solution to this problem.
Essentially Black Cabs cost too much. It is very similar to the battle going on between tube drivers and TFL’s attempt to automate tube trains.
What has brought this to a head now?
“The knowledge” used to be essential to getting a quick ride through a busy city. The problem is Google has automated this — with real time traffic information adjusting routes, minicab drivers can be just as good as Black Cab drivers. Some might argue better on average. The real question is where are Google going with this? Last year Google invested $250m in Uber and this article is probably on the money with their view of the commercial application for this technology — it speculated about the integration with driver-less cars. With today’s announcement that they are going to build a fleet of small autonomous test vehicles, I’m not sure this article is really connecting all the dots.
Essentially merge Uber with a fleet of small driver-less cars and I predict in 20 years the human driven taxi will be the past.
Could this have been avoided? What can be done?
In my view, yes, I think Hailo was the missed opportunity. When it came on the scene a few years ago my use of taxis certainly went up — for two reasons.
- You could get a cab in quieter areas of town.
- Entering my creditcard details and them taking automatic payment meant I didn’t have to see the cost upfront. So I was more likely to use them and pretend to myself that I wasn’t.
I was still concious of cost, but had the fares been lower I’d probably have taken more trips — they failed to hit a price point that made it a habit.
If you travel around New York the first thing you notice is how much more people use taxis, and this is not because the subway is unsafe or bad. It is partly because the grid city makes it quicker, but also because it is not anywhere near as expensive. Expatistan has by distance the journey at 18% cheaper. I think a gross underestimate given how much easier it is to travel distance in a grid city. The problem is that people in London see taxis as a treat, or an infrequent necessity with children or bulky items.
Uber and Google to me represented a glimpse of the future. Congestion in London is killed by thousands of autonomous taxis, where the price is marginally above that of travelling on the tube. Indeed there being a fixed month premium to use them for as many short journeys as you like just like Boris bikes. The Black Cab will be no more.
Hailo represented an opportunity to lead this revolution, and TFL missed out on this opportunity. They are spending £16bn on Crossrail — don’t get me wrong a needed upgrade, but they could have stepped in to help Black Cabs convert to a cheaper more ubiquitous part of the transport system. At tariff 1 Black Cab driver earns ~£1 a minute. If they did 8 hours a day 250 days a year that would be £120k a year! However, the claimed average earnings is about £23k a year after costs. Now there will be some degree of undisclosed income, there is a lot of internet speculation about this, but I’d imagine the biggest explanation for the gap is that they aren’t getting the fares, or they aren’t working a full week — low utilisation. Double it and you can halve fares.
What they should have done is mandate Black Cab drivers to use Hailo. Combined with at least a halving in fares (if not more), utilisation level would have gone up dramatically allowing for even more Black Cabs to get on the road. The tipping point would be making the frequency of availability like tube trains. If passengers can trust they can get a cab quickly and cheaply they will start to rely on doing so. If they then added to the technology “car pooling” with waiting passengers being able to declared destinations ahead of travel — this would have allowed fares to get even cheaper as taxis with fares already on board could be routed to pick up waiting passengers en-route. They could really have transformed the transport network without lowering income to Cabbies. This would have destroyed the competition from minicabs. A shame that the protectionist nature of the union, and the lack of vision means we are likely to see the demise of Black Cab sooner rather than later.