Taxi cartels will be ‘apped’ to death

EU states have made huge strides in transport liberalisation over recent decades, especially in areas such as the air industry. But one sector that has remained stubbornly resistant to change in many of the continent’s towns and cities has been the licensed taxi lobby.

Across Europe, governments and town halls have tried on many occasions over the years to break up licensed taxi unions. The constant complaint of politicians and the public is that taxi drivers in many cities are organised in cartels that use tight monopolies to impose high fares on customers.

To keep drivers busy and well remunerated, these cartels strictly control the number of taxis that get a licence, imposing long waiting times on customers. The former French president Nicolas Sarkozy said in 2008 that “Paris is the only city in the world where it is hard to find a taxi”. Many European leaders – including his successor – can say the same today.

Governments in France, Italy and Greece, among others, have tried to undermine these cartels by expanding the number of licences on offer or by giving greater opportunities for private drivers to ply their trade as is the case in London. But the licensed drivers have successfully fought back, blockading roads and calling strikes.

Now, however, the cartels face a much bigger threat in the form of app-enabled taxi services. Increasingly popular apps run by companies such as Uber, a San Francisco based start-up, link private chauffeurs with mobile phone customers within minutes. Uber has been particularly prominent, raising $258m last year from a group of investors led by Google Ventures.

These taxi apps are unsettling licensed drivers not just in Europe but the US. Under pressure from the licensed taxi unions, regulators have come up with some perverse responses to the new phenomenon of “e-hailing”. This week a Brussels court issued an order banning Uber, stating that Uber drivers will be fined €10,000 if they are caught carrying private passengers.

Reining in these apps in this way is completely absurd. Internet-based technologies are revolutionising industries and shifting employment patterns across the world. Why should taxi drivers be exempt? Neelie Kroes, the EU digital commissioner, described the Brussels court’s decision as “crazy” and “outrageous”. She was right to do so.

The views of the taxi lobbyists cannot be completely dismissed. Licensed taxi drivers in many cities have paid large sums of money to acquire their permits, often through auction. In Paris, drivers pay more than €200,000 to acquire one of the limited number of state taxi licences. In Florence, the cost of permits was recently put at €300,000. New York yellow cab medallions have been sold at auction for close to $1m. Many drivers view these licences as an asset that will guarantee their pension. Having made that investment, they will fight hard against any attempt to devalue it.

At the same time, city regulators will be wary of allowing a taxi free-for-all. A completely unlicensed taxi market has very low costs of entry. If too many drivers enter this market, urban congestion will result. Arguments about the safety of an unregulated market also have some validity.

Still, “e-hailing” is bedding in and the cartels will have to respond. Licensed drivers appeal to some as a service that is more secure and regulated. But one thing they could do is learn some lessons from the taxi-app business. Hailo, a London-based app company, now has 60 per cent of the city’s black cab drivers on its books. It has neatly fused licensed taxis with new technology.

Ultimately, however, licensed taxis will only survive if they go further. There need to be more permits, lower fares and faster pickups. If the taxi cartels fail to change, they will be “apped” to death.

Source: FT

TfL Press Release- TfL invites trades to help shape regulatory framework for taxi and private hire apps

TfL invites trades to help shape regulatory framework for taxi and private hire apps

· Smart phone apps offer significant potential benefits to passengers, drivers and operators

· TfL sets out provisional position and invites trades to help shape regulation of this rapidly developing area

Transport for London (TfL) has confirmed that it welcomes the use of taxi and private hire apps to benefit passengers, subject to those apps meeting the high standards of public safety TfL expects.

TfL is inviting the taxi and private hire trades to provide their views on how the regulatory framework should be applied to this rapidly developing technology, while ensuring that the current highest standards of public safety and customer service in the trades are maintained.

The development of taxi and private hire booking apps offer tremendous potential benefits for customers. This includes enhanced safety and security measures – with many apps providing the passenger with a photo of the driver and their name, the registration of the vehicle and the ability to track both the approach of the vehicle and the remainder of the journey in real time.

However, the rapid pace at which smart phone based technology has been developing in recent years has led to a need for clarity about what is required in order for apps to comply with the regulatory framework in London. TfL is seeking to clarify that position and has asked the taxi and private hire trades for their input to formalise the regulatory framework and ensure there is a level playing field for all operators.

Leon Daniels, TfL’s Managing Director of Surface Transport, said: “We welcome developments that make life easier for passengers. As in many other areas of transport and retail services, apps can offer passengers the potential of better and more convenient services. We are asking the trades to embrace these advances in technology, which have the potential to further improve London’s taxi and private hire services, and have asked them to be part of the formal process to help shape the regulatory framework in this rapidly developing area.”

Constructive meetings were held recently with both the private hire and taxi trades on this issue. Discussions focused on the use of apps for private hire vehicle bookings, with TfL presenting its provisional views on the use of apps, which are as follows:

· Apps can put a customer in touch with licensed private hire operators, either by signposting a customer to a choice of licensed operators or by transmitting a customer’s data directly to a specific licensed operator. Apps that deliver this service do not in themselves ‘make provision’ for the invitation or acceptance of private hire bookings. Only a licensed operator can ‘make provision’ for the invitation or acceptance of a booking.

· While it is perfectly legal for an app to put a customer directly in touch with a licensed hackney carriage driver, any app that puts a customer directly in touch with a private hire driver without the booking being accepted by an operator first is illegal. Even if the licensed driver is also a licensed operator, the booking must be accepted at the licensed premises. A booking can not be accepted by a private hire operator in a vehicle or through a mobile phone on the street.

· Certain details, such as the date of the booking, must be recorded by operators before the start of each journey. There is no obligation to record the main destination at the time of booking unless it is specified by the customer.

· There is no obligation to quote a fare when making a booking via a private hire app unless a quote is requested.

· Smart phones used by private hire drivers – which act as GPS tracking devices to measure journey distances and relay information so that fares can be calculated remotely from the vehicle – do not constitute the equipping of a vehicle with a taxi meter.

Further discussion with the taxi and private hire trades will take place in the coming weeks to help clarify the regulatory framework for this rapidly developing technology to ensure that the current highest standards of public safety and customer service in the trades are maintained.

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