There’s little doubt that Uber has shaken up the taxi industry, with its technology-driven taxi service making it more convenient than ever for customers to hail a ride.
Uber is still rolling out its taxi service around the world. Currently, Uber only operates in select cities in the UK, but it’s expanding quickly – so if they’ve not made it to your town or city yet, it might not be long until they do.
As a taxi driver or owner of a taxi business, you need to know what Uber offers – and how the service differs from a standard taxi service – because ultimately the company is out to take your customers and your business.
The more you know about how Uber operates and how it appeals to its customers, the better you can make your Uber service and, hopefully, the more business you will do and the more money you will make.
The question "Can an Uber be called a taxi?" is one that requires a nuanced understanding of the distinction between traditional taxis and rideshare services like Uber. Essentially, both Uber and taxis provide the same basic service: they transport passengers from one location to another for a fee. However, there are significant differences in how they operate, which complicates the answer to this question.
Traditional taxis are typically regulated by local governments, have fixed fare rates, and can be hailed on the street or booked in advance. Uber, on the other hand, operates under a different business model. It's a technology platform that connects independent drivers with passengers via a smartphone app. The fares are dynamic, depending on factors such as demand and distance.
So, while it may be tempting to colloquially refer to an Uber as a "taxi" due to the similarity in services they provide, it's important to understand that they are fundamentally different entities. The distinction has implications for aspects such as pricing, regulation, and worker rights. Hence, strictly speaking, an Uber cannot be categorised as a traditional taxi.
Uber is effectively a service borne out of a smartphone app. Once a passenger has downloaded the app, created an account and added a payment card, they are ready to go. When they want to use an Uber, they simply put their destination into the ‘Where to’ box and the app will find them the closest available driver.
Uber provides passengers with the driver’s name, photo and rating, and the licence plate, make and model of the vehicle they’re driving. Once the journey is complete, payment is taken automatically and the passenger can then rate their trip.
The app was a game-changer because no other cab companies had thought of it – or if they had, they hadn’t managed to come up with a piece of software that was anywhere near as developed and user-friendly as Uber’s.
Cab companies are starting to play catch up, developing their own technology to compete with Uber’s app – but in that time, Uber has asserted itself in the market as the go-to ride-hailing app.
The price of an Uber all depends on supply and demand. That’s because Uber uses a ‘surge pricing’ model that automatically goes into effect when there are more riders in a given area than available drivers. Read our recent blog on what is surge pricing and why it happens to learn more about it.
During periods of high demand when there are many more riders than drivers, or when there aren’t enough drivers on the road and customer wait times are long, Uber increases its normal fares.
On a Friday night in Bristol for example, the surge fare may be twice the normal fare. When surge pricing is in effect, Uber’s riders will be told that their fares will be higher, and they have to agree to pay the amount. Only then is a driver dispatched to pick them up.
Uber claims surge pricing is good for passengers, by providing an incentive to drivers who are notified in the Uber app when demand increases through a map which shows the busiest areas and information about surge prices. With more drivers populating the busy area, it should mean there are more rides to go round.
Outside of busy times, Uber’s base fares are said to be cheaper than taking a black cab. But for a passenger to be able to take a ride at the base fare, the demand has to be extremely low. This creates an opportunity for competitively priced taxi companies who aren’t fluctuating their fares in the same way that Uber does.
Uber might seem like it’s a tech company, and it is true that its success has, in large part, been down to its fast and easy-to-use app.
It has all the hallmarks of a high-tech Silicon Valley brand, because it is one. The same ease of use is true of other transportation disruptors that have sprung up over the past few years, including Lyft, Uber’s main competitor.
It might look different to more traditional taxi firms, but at its heart – and in the eyes of the law – Uber is a transportation company, and it must abide by most of the same rules as other companies in this space.
That means strict vehicle safety standards, licensing for vehicles, and, as of 2019, inclusion on a national database of taxi vehicles, drivers and operators.
However, Uber has come under severe criticism for how it deals with compliance matters. In 2017, the company was stripped of its London licence on the basis that it was not a “fit and proper” private hire operator.
In its decision not to renew Uber’s five-year licence, the Transport for London cited concerns about public safety and security, including a failure to report crimes or alleged crimes to the police, and to conduct proper background checks on Uber drivers.
This prompted the ride-hailing service to make wholesale changes to its operation, which included the appointment of new management in the UK, to ensure full compliance with regulations.
Following the sweeping changes to its practices, last year Uber was awarded a new 15-month probationary licence by the court, much to the dismay of London cabbies.
These positive moves on safety and compliance will go some way to reassuring passengers – but it’ll find it hard to completely shake its less-than-perfect reputation, which leaves the door open for taxi firms to take advantage.
If you can quickly build up a reputation for being a safety- and customer-first taxi company, you steal some custom back from Uber, especially if you manage to get your pricing and technology right.
There are several advantages to using Uber instead of a traditional taxi service.
If we’ve given you the confidence to go ahead and start up that taxi company and compete with Uber, you’re going to need some taxi fleet insurance. There may even be some more ride hailing apps that you would want to look into and we have covered these on a recent blog.
Taxi fleet insurance is available to fleets of three or more vehicles. It doesn’t matter if you have a fleet of black cabs, minicabs, minibuses, or a mix of vehicles – Taxi Insurer can help you find a taxi fleet insurance policy that matches all your needs and covers all of the vehicles in your fleet, for a price that suits your budget.
With only one policy to remember to renew each year, you can put all your effort into making your taxi business a success and beating those competitors, whoever they may be.