The explosion of taxi-hailing apps in the last few years has transformed how the taxi industry operates. What was formerly a relatively stable and predictable process of booking a private hire vehicle by phone, well in advance, has been replaced by the flexibility of tapping on a couple of on-screen buttons and ordering a taxi within minutes.
Global positioning allows for vehicle tracking so we can now know exactly when our vehicle will arrive, how much it will cost us and how long it will take.
This digital ‘hop-on, hop-off’ capacity is being particularly embraced by the younger end of the demographic.
In this article, we’ll explore the topic of taxi journeys. How many are made, how many miles drivers have driven and what is making the taxi business more efficient (and in some cases more challenging).
If you’re a taxi driver or taxi business owner, then make sure you’ve got the right taxi insurance in place to keep clocking off those miles worry-free.
In 2018, the number of licensed taxis in the UK (that is, Hackney Carriages and Private Hire Vehicles) stood at 285,400.Since then, the number is sure to have risen.
There are barriers to entry in the taxi industry – costs around obtaining a licence, buying a vehicle and equipping it –more and more young drivers are realising that the pros outweigh the cons when it comes to setting up as an independent contractor in this burgeoning sector.
According to the most recent statistics for London, there are around 300,000 journeys made each day in the capital by taxis or private hire vehicles, which accounts for roughly 1% of total daily journeys around the city.
The UK makes up the biggest market in Europe for Uber with roughly 3.5 million users.
This includes ride-hailing companies and licences for private hire cars (including, but not limited, to Uber) which have shot up since Uber came onto the market in 2012 (67,000) to 118,000 in 2016/17.
Well, it’s pretty much one of those ‘how long is a piece of string?’ kind of questions. There are so many variables that the definitive and most accurate answer is elusive.
Drivers who work as independent contractors for taxi companies tend to have highly variable shift patterns.
Early morning and late night shifts are popular among drivers, as the earning potential is higher and there is less chance of ‘dead’ journeys (basically, driving around without a customer in the cab).
On the whole, however, a typical shift can last from anything between 8 and 12 hours.
Don’t forget to factor in a rushed lunch behind the wheel, the need to be available at very short notice and, potentially, working hours during bank holidays and weekends.
Of course, the counter-argument is that, like all freelancers or agency workers, self-employed taxi drivers have enormous flexibility and are at liberty to decide when they do or don’t want to work.
When it comes to the particular case of the famous black cabs, the disruptive effect of ride-hailing companies has had a profound effect on the earning power of cabbies in London.
Undoubtedly, their market share has been eaten into, resulting in the need to work longer hours in order to earn a similar amount of money as before.
Furthermore, as we’ll see later, average fares for a black cab are significantly higher per mile than for an Uber ride.
It’s impossible to apply a blanket rule to the working patterns of London cabbies, but as an indicative example, a driver could earn around £35-40,000 a year by working the Central London patch five nights a week (roughly 831 per week).
This would mean working at night and frequently at the weekends, to capitalise on potentially more lucrative fares.
Uber recently introduced a cap on the number of hours it permits its drivers to work per week.
Steve McNamara, general secretary of the Licensed Taxi Drivers' Association for black cab drivers, told the BBC that the cap still allowed Uber partners to work 100 hour weeks or more and that this would do little to improve passenger safety.
He also noted that, as Uber drivers are independent contractors, the company wasn’t within its legal rights to enforce such a cap, meaning that some drivers could still work up to 14 hours a day.
As we’ve noted, the barriers to entry for working as a taxi driver at an independent company are relatively low.
Other than an enhanced CRB check and obtaining a taxi licence, they can use their own car (suitably equipped) and everything else is provided by the company.
When it comes to black cabs, there is a significant hurdle for budding cabbies to surpass.
Unlike Uber drivers, all black cab drivers undertake enhanced driving tests and are therefore well aware of the dangers of working excessive hours.
The taxi industry is one of the great exemplars of the business mantra ‘continuous improvement’.
The growth of dedicated technology and cloud computing has allowed for tremendous gains in efficiency, of benefit to customers, drivers and the taxi fleet owners and managers.
Here are a few of the main ways the taxi industry has improved thanks to technology:
Reliable and up-to-date statistics are hard to come by to determine how many miles the average driver can get out of his or her taxi.
The variables involved are many; times of shifts worked, type and age of vehicle and type of driving conditions – long journeys on the motorway are clearly not the same as stop-start driving in the city centre.
However, in recent years, we can say with some certainty that taxi drivers across the nation have easily been exceeding 20,000-30,000 miles a year.
The South East, and London in particular, ups that figure, with drivers doing an average of around 30,000 miles.
American surveys on Uber and Lyft drivers go into a little more detail, although some of it is anecdotal.
It’s claimed that some (not all, we assume!) full-time independent drivers clock up more than 1,000 miles a week, meaning over 50,000 miles a year.
(According to the Taxicab Factbook, your archetypal yellow NY cab averages some 70,000 miles a year, which seems like an awful lot!).
The average car will start to show signs of wear and tear after 100,000 miles, will probably need serious work on the engine by 150,000 and is likely to break down before it reaches 200,000 miles.
If we take the figures from the paragraph above as read, that means a lifespan of between three and four years for a taxi.
According to Uber’s own figures, it has just over 45,000 drivers in London.
This number contributed to the present mayor, Sadiq Khan leading a campaign to ban Uber from the London area, as he claimed that traditional cab drivers' livelihoods had been significantly affected by the steady rise in numbers.
Despite an initial ruling banning Uber being overturned, the campaign only added to the scrutiny of Uber and the inflationary effect it was having on the ever-expanding ‘gig’ economy in London.
It is wise to take any statistics about the earning of taxi drivers with a pinch of salt because there is no centrally administered database with a large enough sample to verify one figure.
Data from a well-known recruitment platform puts the average salary for a London taxi driver at £831 per week, a staggering 87% above the national average, with the average time in the job for drivers being between three to five years.
A report compiled by sources at Oxford University was given access to internal data from Uber and concluded that its drivers made only £11 an hour on an average working week of 30 hours, once they had subtracted fixed costs (fuel and licensing).
This income would place the average drivers just above the threshold of the London Living Wage of £10.20 per hour.
You could argue that London is not a representative sample of the overall taxi market in the UK, but the living to be made from working with Uber depends to a great extent on how many hours you work, whether the vehicle is yours or not and the type of journeys you are doing.
Other factors like wear and tear, car model, and volume of custom also have to be taken into account.
Among the most representative cities in the world, London is fourth in this ranking of thirty-six capital cities worldwide.
Using a black cab is almost twice as expensive as taking one of New York’s yellow cabs over the standard 3km/two-mile journey.
Regarding Uber, London and New York are clearly valuable markets and the cost per mile of fares reflects this. Check out our recent blog on taxi fares and how they work.
Despite that fact, the highest fare is Helsinki, where an Uber costs over £4 per km.
Dublin, Amsterdam, Stockholm and several others rank ahead of London and New York, who both clocked in at roughly the same cost – a respectable £2.20 per km.
Given the cost of living in London (for drivers, that is), London's Uber pricing is understandable.
What is notable is the price differential between an Uber and a black cab in London, because in New York it’s the other way round – an Uber journey works out at around 20% more expensive than a licensed city cab.
Not surprising, then, that this traditionalist muses over the possible future of the iconic black cab.
Uber’s competitive advantage is price. A journey from central London to Heathrow, for example, might cost £45-£65 in a black cab, but if you order an Uber (depending on the time of day) you could cut that fare by 50%.
One very important factor to bear in mind is the pricing policy of companies like Uber. When demand is high, these companies rely on so-called ‘surge’ pricing.
This means that at peak demand times, fares can go up by as much as 300% the regular price, the principle being that by giving drivers the right to charge a premium price, there will be more of them on the road at peak times and that will meet the demand from passengers.
In cases like this, a traditional cab could well be a cheaper option. Surge pricing happens a lot in some high-traffic neighbourhoods and the proportion of Uber cars involved could be up to 25% of the total.
Whether you are a London cabbie steeped in ‘the knowledge’, an owner of a fleet of local taxis or an independent contractor working in the gig economy, you need to have the reassurance that suitable taxi insurance coverage provides.
Benefits of taxi insurance through Taxi Insurer can include:
Get a quote today and make sure you and your vehicle are protected.