Battle of the cabs: Hailing competition in London’s transport

Richard Farleigh
WHEN I lived in Monaco, I had Ferraris. Now, living in London, I have a basic car but barely use it. The hassle of parking and traffic have made me a cab and minicab user, and I’ve recently noticed interesting things going on in their business world.

Cabs have had two unique selling points. Unlike minicabs, they can be legally hailed from the street – a huge advantage when so much hiring is done on the street on demand. Secondly, they have “The Knowledge”. Cabbies have such an amazing and unmatched memory of streets and locations that research has been done into their ability and techniques. At times, it’s been a booming business. I remember a number of years ago when they increased their prices and were the most expensive in the world. That has probably changed with time and the weakness of the pound. Cabs have also benefitted from their awesome reputation and branding, while minicabs have been seen as unregulated and even disreputable.

Then a number of years ago, that started to change. The minicab company Addison Lee started to get organised and eat the cabbies’ breakfast. Its distinctive branding and recognisable name brought a new respectability to minicabs. But it was more than that. It hit at the heart of the cabbies’ USPs. Firstly, the advent of GPS has probably meant a severe devaluation in the value of The Knowledge. Relatively novice and even foreign drivers can find their way around London by simply inputting a postcode. Secondly, smartphone apps have made booking a car really easy for the consumer. They find the location, can remember past destinations and give you fixed price before the journey starts. It’s not been a surprise to see Addison Lee cars more and more on London streets.

To me, there is a huge question looming: if you stand on the street and use an app to order a nearby car, is that not “hailing” a car, just because you don’t wave a hand in the air? If you can hail a car so easily, what’s the justification of an expensive cab license? And I don’t know if it’s this competition or the recession or just exaggeration in recent gossip about cabbies being grumpy lately. If they’re struggling for business, perhaps they could lower their prices, which I’m not sure they’ve ever done. What they have done, though, is to finally release an app of their own. Hailo”works wonderfully and makes ordering a cab inexpensive and easy, so maybe they’ll claw back some market share. It’s certainly interesting.

A US company, Uber, has launched a luxury car app service at a reasonable price. They asked me to be their first London customer and I have to say I enjoyed it.

Whoever wins this battle, it is probably good for you and me. No more standing in the rain, jostling against others, looking for a cab while a few streets away a driver looks unknowingly for passengers. In this age of information, that shouldn’t be possible.

Richard Farleigh has operated as a business angel for many years, backing more early-stage companies than anyone else in the UK.