There are around 284,000 licensed taxis in the UK, most of which operate as sole traders, relying purely on their own hard work to make a living.
However, there are also many taxi businesses running successful fleets. These multi-vehicle operations come with their own opportunities and threats. We’re going to take a closer look at the fleet segment of the taxi industry, identify some of the common problems that fleet owners face and how they can address these effectively.
We’ll also look at how fleet taxi insurance can help business owners shoulder the financial costs if anything goes wrong.
What does ‘fleet owner’ mean?
A fleet owner is defined as a person or group of people who are owners of a group of vehicles used for a common purpose and rented out to drivers with a taxi licence. The fleet owner is responsible for:
- Maintaining mechanical functions and interior of the vehicle to a specified standard.
- Allowing inspection by appointed taxi and private hire officers.
- Maintaining drivers’ records in line with data protection laws.
Any person who wants to become a fleet owner is subject to certain checks, such as:
- A Disclosure and Barring Service (DBS) check.
- Possible offences committed under taxi legislation.
- Any details about previous ownership.
- Confirming that the vehicles making up the fleet are fit for service.
There are even different insurance products for individuals or companies that operate a group of cars, such as specialised taxi fleet insurance, designed to cover an entire fleet. This reduces the time and stress around having to take out a separate policy for each and every vehicle, so it’s definitely worth learning more about.
What’s the difference between a taxi and private hire vehicle?
Before we get into some of the key challenges facing taxi fleet owners, it’s useful to make the distinction between the two types of taxi service – hackney carriages and private hire vehicles.
Running a hackney carriage means you have the right to pick up a fare anywhere in public – on the street, outside a venue or at a train station, for example. There is no requirement for the passenger to have booked your services in advance, so you don’t know the destination when the customer gets in. A customer may hail your vehicle from anywhere and you simply stop, collect the passenger and start your meter.
A private hire vehicle is only permitted to take a customer who has previously booked the service through the company. This particular type of licence means that even if you are on your way home after a shift and you see the opportunity for one last fare, you are not permitted to pick up that person up.
We will largely concentrate on private hire vehicles here, because, other than large cities like London, private hire vehicles represent the large majority of the market for taxis in the UK. Local authorities strictly limit the number of hackney carriage licences they issue to make sure the supply/demand relationship doesn’t become skewed.
Problems and challenges when operating a taxi fleet - how to solve them
There are various challenges and problems we could identify when it comes to taxi fleet ownership, but we will focus on five of the most common, starting with the real game-changer – technology.
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Keeping track of your drivers in real time
If you look back 20 years, the tax industry looked very different to how it does today. Back then, technology was limited to dispatch radios and a meter system and anything more sophisticated was way too costly to invest in.
You couldn’t tell exactly where your drivers were at any one time and management of a taxi fleet was pretty hit-and-miss in many respects.
Today, subscription-based fleet management systems allow for real-time tracking of the fleet via an on-screen map. This software can also assign certain routine tasks to help save taxi owners time and money. Another common function is route optimisation – finding the shortest and fastest route thanks to real-time traffic monitoring.
There are many companies offering fleet management software services for taxi businesses and prices vary depending on your needs and budget.
Customer apps
There are now many apps that allow customers to book their taxis in an instant and see how much the fare will cost before entering the cab. If your taxi firm invests in a bespoke app for your business, it gives you the opportunity to reach out to customers with targeted, personalied marketing promotions. Passenger apps are becoming a very significant platform for engaging with the client base and picking up repeat bookings.
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Making taxis more environmentally friendly
Most large cities across the world are facing a pollution crisis, which is becoming more and more high-profile. In London, black cabs don’t pay the Ultra-Low Emission Zone charge, even though they account for 20 per cent of road transport emissions in central London. This percentage will only continue to grow unless action is taken. TfL has made proposals which aim to address the issue by reducing NOx emissions from taxis by 65 per cent by 2025.
In fact, there are already around 2,500 electric cabs, or e-taxis as they’re known, in the capital right now, but the London Taxi Drivers Association (LTDA) says that more boroughs need to accept charging points in order for the fleet to continue to grow.
Reducing emissions is a complex area and may not be high on your list of priorities. Nevertheless, given the rising concerns about the effects of climate change among the general population (and therefore your customer base) the impact on your reputation will only be positive if you can switch to lower emissions.
If this is something you can do – switching to hybrid or electric cars for example – then it’s worth emphasising it in your promotional activities. There are, in fact, a few UK companies (see two examples of these, here and here) which sell themselves on this attribute. Therefore, it’s worth investigating what vehicles would be most suited to helping the environment when next renewing the cars in your fleet.
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Dealing with problem drivers and customers
If you own a fleet of taxis you’ll also have a diverse group of drivers who represent your company and interact with your customers every day.
Your drivers are the public face for your company and they have to maintain standards of safety, service and quality 24/7.
One bad experience with a driver will not only put off a customer, but that person is likely to spread the word – and bad news spreads quickly, especially on social media.
Research shows that keeping an existing customer happy costs one-fifth of the cost of attracting a new one. Healthy and profitable taxi firms are reliable, friendly, safe, efficient, honest, reasonably-priced and, above all, predictable in terms of the quality of service.
A thorough induction process and continuous training and development should give your drivers a good idea of the standards you expect.
Difficult customers
But it’s not just the drivers’ behaviour you need to worry about. One of the biggest challenges for taxi firms is problem customers. Of course, the nature of taxi driving means that sometimes your drivers will be picking up clients that might be a little worse for wear, for instance, after a boozy night out on the town.
You have to be sure that your drivers know how to deal with these customers tactfully and safely, especially if they become abusive.
Some customers may run off without paying; others may make your driver feel threatened. The best advice is to tell your drivers to stay with their cabs – that way, they’ll be able to use the radio to call for assistance if required.
You may also consider adding CCTV to your taxi fleet and a glass or plastic partition between the passenger and the driver.
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Providing a consistent high quality service
Good interpersonal, ‘soft’ skills are a must for good customer service. However, when providing a standardised service, there are other key elements that demonstrate to your customer that you care about them and take their safety seriously.
Your focus shouldn’t just be on getting them from A to B as quickly as possible. There are other associated responsibilities involved with running a reputable taxi fleet, including:
- Thorough knowledge of health and safety regulations
- Up-to-date knowledge of safeguarding legislation
- Knowing where it’s safe to collect and pick up passengers
- Keeping the interior of the vehicle clean and hygienic for customers
- Washing and polishing the exterior to provide a positive and ‘polished’ company image
- Ensuring personal appearance is of an acceptable standard. This may involve the use of uniforms for your drivers, as they can convey a standard, corporate identity.
You can easily train and monitor your drivers when it comes to these skills, and your attention to detail will pay off if your drivers are committed to the company long term.
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Fuel costs
Nowadays, the use of fuel cards is becoming more widespread, so using such a system makes sense when monitoring operational costs. The two most common options are:
- A fixed weekly price card, where every litre you buy using that card is charged at a fixed price over the week. You can, therefore, stabilise your overall fuel costs, and ensure there are no price fluctuations.
- A pump price card. You will pay the pump price, but the process is simplified. Companies offering this type of card often provide access to an account management system, meaning a lot of data on fuel consumption and refuelling patterns. This clearly helps you when attempting to develop a more fuel-efficient operation.
Do private hire taxis need an MOT?
Private hire vehicles certainly need a valid MOT certificate to operate legally. Due to the amount of wear and tear a taxi suffers, it needs a very thorough yearly safety check compared to a normal vehicle. Any vehicle legally seating up to eight passengers (excluding the driver) is classified as a taxi and, as such, is regarded as a public service vehicle (PSV). A taxi has to have passed its PSV test in order to drive legally on UK roads. This test is similar to an MOT, but much more rigorous in its inspection.
Can you operate a taxi service from home?
If you are an individual setting up as self-employed taxi driver, it’s likely that you’ll be able to run the business from home – that is, if it’s OK with your mortgage company and local planning office. However, if you want to manage a taxi fleet, parking all those extra vehicles could become problematic.
If you are running a fleet, either let your drivers park outside their own homes or find a secure lock-up close to your centre of operations. With a fleet, this should be a location with convenient access to all major routes. Ideally, it should also be suitable for the vehicles in your fleet to be refuelled and maintained.
It’s also important to make sure all your vehicles are insured so you’ve done everything you can to keep them safe, even when they are off-duty. One of the best ways of doing this is by taking out a taxi fleet insurance policy.
Protect your cars with taxi fleet insurance
Running a taxi fleet is a huge responsibility – dealing with customers, ensuring driver safety and maintaining your fleet. That’s why having the right kind of taxi fleet insurance in place is critical.
Your business needs specialist protection that standard car insurance won’t be able to give you. As the business owner, you need to ensure that if anything goes wrong, you are comprehensively covered for all eventualities.
Here at Taxi Insurer, we are specialists in finding taxi fleet insurance, so contact us to get a quote today. Benefits of taxi fleet insurance through us can include things like:
- Cover for minibuses
- Cover for MPVs
- 24-hour claims management service
- Ability to pay in instalments
Give your vehicles, your drivers and your customers the protection they deserve.