THE BATTLE BETWEEN STREET AND APP FARES: Does there need to be a winner in the taxi industry?

Image credit: DALL.E (AI generated)

Street work requires no commission fees to a third party. The driver can keep 100% of the fare, if paid in cash, or pay a minimal amount for card processing fees usually sitting around 2%. For work taken via apps, as much as 20% could be paid to app booking platforms. Whilst this is dramatically less than private hire commissions, during busy periods in key areas of demand, taxi drivers find it difficult to prioritise app over street hails.

There’s also no lost time running in or expense in fuel when it comes to dead mileage. There’s nothing more immediate than a taxi in front of you with its light on available!

That said, apps play their part in the taxi ecosystem. Street hails very rarely happen one after the other 24/7 and in suburban locations outside of the main thoroughfares it is a great way of finding the limited demand in that area. Prolonged dead time with no passengers onboard is no good for any taxi driver and a percentage of something, is better than a percentage of nothing.

The key is striking the right balance. The taxi industry cannot ignore the streets and ranks, but equally it cannot ignore business accounts and app users preferring to use technology to hail their service.

How do apps compete against street hail demand?

Bonuses that cover the run in times and commission fees are offered on some platforms. Some app platforms also offer larger bonuses or reduced commission for completing a certain number of fares via their app to entice drivers to service black cab customers looking on the apps.

Yes, passengers pay a premium often above the metered price and not everyone in the industry agrees with that. However, crucially enough passengers will pay the premium in order to secure a black cab over others also searching when demand is high. Are these customers our premium customers or does this model simply just allow the more wealthy to take priority over passengers that are regular passengers when charged at the regulated metered price? The answer probably sits somewhere in the middle and isn’t black or white, and it remains a question that makes some cabbies feel uneasy.

What can’t be denied is that the premium offers do work when it comes to enticing drivers to servicing all passengers when there is strong demand. Some in the industry would argue that all street work should take precedent, but surely any customer willing to use a taxi is just as important as the next?

Taxi services, and the marketing of them, have to be diverse to meet the variety of buyer preferences; just as any industry needs to diversify to meet demand. Some people like booking a taxi from their phone and that’s their preference. Some drivers have no interest in taking jobs via an app and that’s their preference. Making sure there’s enough drivers to service every passenger preference, while keeping a level of fairness on both sides is the holy grail. Can it be done?