How much do you know about taxis? In the second article of a two-part series, four IRU taxi members uncover the challenges and misconceptions facing the sector and where it will be in five to ten years.
Besides decarbonisation, what are the challenges facing taxis?
BVTM (Germany): The main challenge in German cities is the unfair competition with private hire vehicles (PHV) that operate with large international platforms. Unlike taxis, PHVs are free to operate without fixed prices and outside the profession’s strict rules. This damages the taxi market and is a severe threat to the entire sector.
Then, there is the post-pandemic financial burden. Many companies have used their reserves and are now struggling to make new investments in digitalisation or decarbonisation.
KNV (Netherlands): Firstly, customer demand is becoming more complex, and budgets are under pressure. Customer expectations are often far higher than the efficient mobility solutions providers can offer, especially in the contract market. At the same time, there is a trend to eliminate all cars from city centres. However, cities should see taxis as part of the solution for possible car-free city centres. The importance of the taxi sector is not fully understood. Lastly, as in the wider road transport industry, there is a global shortage of drivers.
UNIT (France): Taxis suffer from an uncontrolled increase in transport offerings, including PHVs. This leads to congestion, pollution and illegal activities.
Veezu (UK): In addition to the industry-wide shortage of drivers, an ageing driver population and difficult post-pandemic recovery, the sector is facing multiple other challenges.
For example, British legislation on the employment status of PHV drivers is unclear, which leads to constant uncertainty. It also translates into uncertainty regarding the role of PHV drivers and the related VAT rates. Furthermore, the most modern legislation applicable to PHVs was enacted in 1998 and makes no reference to the internet, mobile phones, apps or cloud technology.
Instead of a complex web of laws, regulations, policies and best practices, the sector should have a clear legal framework to guide its operations. It would be useful to clarify the rules for multi-apping, which allows operators to accept bookings based on a virtual pool of drivers and vehicles rather than a dedicated fleet that they know and manage. Drivers therefore frequently refuse or return lower-value bookings, leading to less reliable services and a confused and disappointed public.
What are the latest innovations driven by taxi companies?
BVTM (Germany): Two ongoing developments are of interest. The first one is integrated dispatching across different IT systems and apps to help clients find the best mobility solution for their individual needs.
The second one, despite not being entirely new, is pooling technology. In rural areas, for instance, taxis can provide added value to coaches and other modes of public transport.
KNV (Netherlands): The sector is transitioning towards a new system of on-board monitoring computers and rest times. The idea is to provide data in near real-time to authorities, possibly through a mobile app.
UNIT (France): Taxis offer mobility services for everyone. The Paris region is significantly expanding its fleet of wheelchair-accessible taxis in 2024.
Veezu (UK): The sector is still largely in recovery mode from the impact of covid-19. Due to an ever-changing regulatory framework, many smaller companies are focused on the commercial survival of their business and meeting their compliance obligations. Therefore, few companies have the resources right now to invest in innovation. When available, innovations are largely focused on new approaches to pricing and regional expansion. Larger companies are also investing heavily in data mining, artificial intelligence and driver training.
What is the biggest misconception about the sector?
BVTM (Germany): There are two widespread misconceptions. First, that the taxi fleet is owned and operated by one large company. Whereas, in fact, Germany’s taxi fleet is operated by 32,000 mostly small companies.
The other misconception is that the taxi sector is still basically the same as it was 50 years ago. But apart from still having a car and a driver, nearly everything else has changed. Dispatching was digitalised in the 1980s, while booking systems were digitalised in the 2000s. Data-driven digital technologies are already at the heart of the taxi business.
KNV (Netherlands): The most vivid misconception in the media and in the formulation of policies is that the taxi business basically consists of taxi stands and street hailing. The direct-to-consumer market is only a small part of the sector. Care transport represents by far most of the business. Its social impact is tremendous but insufficiently visible.
UNIT (France): The principle of a taxi licence is sometimes perceived as belonging to the past, but it’s actually an essential contemporary tool for organising transport services. A growing number of cities are creating licences for free floating scooters, bicycles and other vehicles to better share public spaces and have rules that serve the public interest and the security of passengers.
Veezu (UK): It is widely accepted that owning and running a private car is cheaper than taking taxis. This is an unfortunate misconception that hurts the sector.
What will the sector look like in five to ten years?
BVTM (Germany): It seems quite certain that digitalisation will continue until the taxi fleet is fully digitalised, including in rural areas. Also, decarbonisation will accelerate and zero-emission taxis, particularly battery-electric vehicles, will make up most of the fleet, if not the entirety. More trends could be mentioned, but there is a lot of uncertainty.
KNV (Netherlands): Taxis will continue to be an indispensable link in the connected mobility chain. Most of the fleet should consist of zero-emission vehicles and the delivery market should further expand. The sector will still need to provide safe and high-quality transport, be innovative and offer mobility solutions that meet customer demand.
Our mission will be to ensure that the transport system is affordable, accessible and organised in an integrated manner to remain attractive.
UNIT (France): Customers desire more sustainable, inclusive and peaceful cities. The challenge for the city of tomorrow is sharing the public space between different modes of transport services. There is a strong push from public authorities to reduce individual cars in cities. The role of taxis is expected to increase as their licence already grants them the right to use public roads for work. With their clearly identifiable roof signs and their regulated numbers, taxis should become the preferred partners of public authorities.
Veezu (UK): The sector will most likely be operated by less competitors as the trend towards consolidation continues. The burden of costs related to compliance, adopting electric vehicles and potentially providing more social benefits to drivers will likely drive prices up.
However, the sector may benefit from new barriers to private cars in cities. Younger people already appear to be taking their driving tests later in life than before. Although this has not yet translated into lower car ownership rates, it is likely to influence it at the very least.
In terms of technology, drivers are likely to be even better trained, with cars fitted with CCTV and telematics. Multi-apping could establish a new approach to fares whereby customers and drivers bid on fares electronically, specifying their acceptable limits. Customer apps are also likely to become much more selective about which drivers they accept based on their ratings.
Finally, we hope that the legal and regulatory environment will be more stable, providing greater clarity to drivers, operators and customers.
Part one of this series explores the key challenges undermining the taxi sector’s transition to net-zero emissions.