Hail farewell to taxi stands, hello smartphone and cab apps

Consumers are benefiting from more options, more convenience and better service in brave new world

A user scans for an available vehicle using the Uber  app. Photograph: Simon Dawson/Bloomberg

A user scans for an available vehicle using the Uber app. Photograph: Simon Dawson/Bloomberg

 

At some point in the future, the current generation of 30-somethings will be able to regale their children with tales of times gone by, when trying to get a taxi at 3am on a Sunday morning was an exercise in hope triumphing over common sense.

Those were the days before the taxi market was opened up, when plates could be sold for thousands of Irish pounds and any night out usually ended up in an hour-long queue on Dame Street or St Stephen’s Green.

It was also before the days of the smartphone and, more importantly, before the launch of apps that could hail a cab for you.

There is somewhat of a sea change happening in the taxi market around the world.

Services such as Hailo, Uber and Lyft have replaced the traditional taxi hail, ensuring that you can book a cab when you need it, without ever having to speak to a live person.

From the customer side of things, it has the advantage of being able to see where their car is on a map and how soon it will arrive. For drivers, it opens up new business to them, although they have to pay a commission to the company they’ve signed up with.

The businesses themselves have access to a pool of drivers without having to employ them directly, although they have local offices and managers to oversee things. The more drivers they sign up, the more potential revenue they can tap.

It is an increasingly competitive sector and the different services are being backed by some of the best known venture capital funds in the business.

Uber is the leader in both funding and the number of cities in which it is available. It has raised about $6 billion in funding, with a range of venture capital funds backing it from Google Ventures to Sherpa Ventures and investors such as Amazon founder Jeff Bezos. In the US, it offers a range of products, from low-cost UberX and XL to SUV, Taxi and UberBlack, its original offering.

Its main competitor in the US, Lyft, has raised $1 billion in funding, with backers including Andreessen Horowitz and Founders Fund. Most recently, it raised $150 million in a funding round, with investor Carl Icahn sinking $100 million into the company.

Lyft offers people a ride-sharing service. It isn’t available outside the US yet and only in certain cities – San Francisco, Los Angeles, Chicago and Colorado Springs. Its drivers aren’t necessarily commercially licensed vehicles, but Lyft says they are background-checked before being allowed to carry passengers through its service.

Its drivers are ordinary people who just want to use their cars to make a bit of extra money, whether it’s to pay off the car loan or cover the cost of the lifestyle to which they would like to become accustomed.

Lyft has a more warm and fuzzy image. Cars once sported pink fuzzy moustaches, now replaced by a magnetic Lyft moustache on the dashboard, and passengers are greeted with fist bumps.

It’s hard to know how the various firms are doing. As private companies, they don’t disclose their financial information. But leaks have given a little insight into the workings of both Uber and Lyft.

Lyft isn’t profitable now, as it continues to invest heavily in marketing to help boost its market share.

Increase

The company also expects to increase its revenue from $130 million (€118 million) in 2014 to $796 million this year as it adds new products to its line up. In addition to the Lyft Classic service, it also offers the carpooling Lyft Line product.

Looking at the funding figures, Hailo is firmly in third place. However, while Irish people may be more familiar with Hailo than Lyft, the firm hasn’t done as well in the US as it might have anticipated.

It made an attempt on the north American market in 2013, But at the end of last year, it announced it was pulling out of the US, citing intense competition and the high cost of marketing. Europe and Asia are its main targets now, the company said.

It is not having a clear run of it here either, though. Uber hit the Irish market in 2014 and has been fighting it out ever since for Irish customers.

Hailo has the advantage of being first to market, launching in Dublin 2012 before expanding to other cities and eventually across Ireland last year.

In Dublin, only two services are available on Uber – Uber Black, which is its black car service, and UberX. Uber Black is the more expensive of the two; fares are calculated not only on distance but also length of travel time.

Estimate

Both companies have launched business services in recent months that allow companies to set up accounts that employees can use on the apps.

Hailo also added some premium services to its line-up: Hailo+, which guarantees a high-end taxi, and HailoExec, a luxury car service with a €15 minimum fare. Hailo has 400,000 registered customers in Ireland, with Uber claiming “tens of thousands”.

It is not only in the Irish market that Hailo is stepping up its game. In London, Hailo has teamed up with Bookable, a restaurant marketplace, to allow eateries to book a cab at the push of a button.

The first phase of the plan, which will see the service available to Bookable’s top- end restaurants, is under way and an additional 1,500 restaurants are set to join up by the end of the summer.

However, not everyone is pleased with how the services have changed the industry. London mayor Boris Johnson is seeking new legislation that would limit the number of minicabs operating in the city. That would have a direct impact on the success of Uber there, with 14,000 of the 78,000 minicabs in London currently part of Uber’s service.

It has run into trouble in with unlicensed services in Germany, France, Portugal, Spain and the state of Geneva. Italy became the latest to ban Uber Pop, the unlicensed service, in May following a court ruling.

Cab drivers, meanwhile, have been vocal about their opinion on the services. While Hailo’s founders include three London cab drivers, its decision to open the platform to private hire vehicles caused a storm in London.

Uber, meanwhile, launched UberTaxi in London in June, the timing of which coincided with a major protest by taxi drivers in the city.

The big players however are facing competition from more local companies. Global taxis has launched its own app, Lynk, earlier this year, while NRC also has an app for booking taxis. Global has more than 2,500 drivers in its fleet, with an operation in Dublin that employs 170 people in customer service.

It wasn’t the first Irish company to make such an attempt on the market. Before Hailo arrived,a service called iCabbi attempted to sign up drivers, while Winicab tried to do deals with mobile phone firms to allow customers to pinpoint locations for customers who preferred to make the traditional taxi call.

Regardless though of who is providing the service, it seems as if it is the customers at least who are benefiting – more options, more convenience and better service.