Apps widen the technological capabilities of taxi services

The familiar sight of the black taxi hurtling through the streets of London has been under threat from the growth of convenient minicab services reliant on drivers with sat nav systems. In recent years, ‘cabbies’, known for their encyclopaedic knowledge of the city’s streets, have seen many customers desert them for minicab firms.

Firms like Addison Lee do not require drivers to undergo the sort of exhaustive training necessary for a black-cab license (known as ‘the Knowledge’) and have benefited from an easy-to-use phone system.

New tech, old industry
In the last year, black-cab drivers have embraced new technology as a means of fighting back against the minicab firms. Hailo, an application initially launched on Apple’s iOS platform towards the end of 2011 by some entrepreneurs and black-cab drivers, has enjoyed a rapid uptake by both customers and drivers.

I’ve always believed it’s what’s been missing in any taxi market in any city in the world

The app enables customers to order a taxi in seconds, even allowing them to track its progress on a map. Payment is taken either through a card account or by cash. Since launching, the app has been downloaded by roughly 10,600 of the 23,000 black-cab drivers in London, with most praising the increase in business they’ve seen. More than 225,000 customers have also downloaded the app.

One of the co-founders, Jay Bregman, told Londonlovesbusiness.com the reasons the app has been so successful: “We build better networks that mean cabbies are closer to more hails and availability is higher for customers without paying a fortune. What also gives us an edge is that the taxi community trusts us because former taxi drivers themselves are behind the business.”

Even though Hailo takes a cut of the fares drivers receive, many are pleased with the way it has boosted trade. One of the aspects most appreciated is the freedom drivers have to use the service whenever they want. They aren’t tied to a working schedule, as with minicabs, and retain the freedom and flexible working hours they’re used to.

Bregman told Wired magazine: “We aim to deliver to drivers only 20 to 30 percent more incremental fares each day to fill their downtime. So we always have more drivers than we need. Hailing times in London are mostly down to two minutes, and they’re falling.”

Taxi across the water
Such has been Hailo’s success in London that it’s already expanded to nine cities around the world, with highly competitive – and potentially lucrative – New York added in February. One of the founding drivers from London, Russell Hall, told the BBC he saw the model as transferable to many cities: “I’ve always believed it’s what’s been missing in any taxi market in any city in the world. What we’ve created in London will go to any city.”

In New York, however, the company faces stiff competition from another start-up, called Uber. More established in the US, Uber recently began signing up ordinary drivers so they can offer their own taxi services. Another market many firms are looking at is Japan, with Tokyo offering considerable rewards to whoever cracks it first. Hailo’s Chairman, Ron Zeghibe, told the Financial Times: “Japan’s market alone is worth $25bn and Tokyo weighs in at twice the market value of either London or New York. We will become Japan’s first end-to-end mobile taxi app.”

Hailo recently secured $30.6m investment from venture capital firms, including Twitter and Foursquare investor Union Square Ventures, as well as Accel Partners, Japanese telecom firm KDDI and Richard Branson. Since its inception, the company has received over $50m in backing, reporting over $100m in sales in 2012.