If you’re a passenger, using a taxi has become a much easier and cheaper proposition in the last few years. The emergence of online platforms like Uber have given us the convenience of knowing when your car will arrive and even where it is as you wait. The image of hailing a taxi and looking sad as several full ones speed by is now almost a thing of the past. Most of all, you have absolute certainty about the fare you’ll pay.
The other side to the story is that these are challenging times for taxi drivers, as much for self-employed (black cabs or mini-cabs) as for those independent contractors working with platforms like Uber. We can add many small taxi business owners trying to survive and thrive in this ultra-competitive marketplace to that list, too. They are finding;
The taxi-driving game is changing as technology shifts the industry paradigm, with use of apps, GPS systems and fixed fares practically obligatory for the larger companies nowadays.
When we look at statistics from 2018 for the taxi sector, there is one taxi driver for every 250 members of the population, well over a quarter of a million licensed taxis (a rise of 1.7% from 2017) and 361,500 taxi or private hire vehicle licences were issued - a rise of 1.6% from 2017. A fair proportion of drivers share the use of a vehicle, especially those working for small businesses. Almost three quarters (75%) of all licensed vehicles in England were PHVs (a 3.4% increase from 2017).
It’s a challenging operating environment, but a good living can still be made by taxi drivers who are able to harness technology and re-invent themselves, perhaps in market segments such as drivers for special occasions or particular routes with heavy demand.
There are a number of practical questions arising for those who may want to move into the taxi-driving business and we’ll take a look at some of the most common queries.
There are two types of taxi; the Hackney Carriage and Private Hire Vehicles. The main distinction between the two is that you can hail a Hackney Carriage on the street or wait for one at a taxi rank, whereas you need to book a private hire vehicle in advance. The information below covers both types of vehicle.
To begin with, it’s worth noting that the licensing requirements for taxi drivers differ from one local authority to another. However, certain requirements are common to all. You will certainly need to have;
It’s normally local government offices which issue taxi licences, so the first thing is to approach them. The easiest licence to obtain is a hire car driver’s licence which doesn’t involve much more than completing a form, paying a fee (£40/50 per year) and being approved by a council committee. You also need to have held a full driver's licence for a stipulated period.
The necessary enhanced CRB check can be carried out by the local authority on your behalf and is included as part of your application.
Many local authorities ask you to complete a local knowledge test of some sort, which could be pretty straightforward, or incredibly hard if you want to be a London taxi driver. Known as ‘The Knowledge’, the London black cab driver test is notoriously difficult (so perhaps if your memory is not so good, it’s a smart idea to find a job as a local cabbie in a village).
On you’ve got this sorted, you’ll need consider business expenses, taxi insurance and what kind of niches you might want to cater to. Before we go through these, let’s take a look at how you can get started as a taxi driver, particularly if you’re looking to gain experience. There are a few ways you can get started on the road to becoming a full-time taxi driver, they include:
As an employee for a taxi company - You might get part-time, occasional or full-time work. Some owner-drivers of public hire taxis might maximise usage by getting another driver or two in to work their cab or cabs when they’re not out driving themselves.
Rent a car from a local taxi company - If for any reason you miss a payment, don’t expect to be in the vehicle too long – taxi companies don’t want you building up arrears they might not get back and will just move the vehicle on to someone else.
Owning your own vehicle - There are tens of thousands of taxi owner-drivers across the UK and Ireland and self-employment is very common in the industry. Like renting, owning means you keep all the fares and tips you earn.
As for how much you will earn, that’s a ‘How long is a piece of string?’ kind of question. It very much depends on the hours that you’re willing to do, what time of the day or week those hours are, the niche you are attempting to break into, and even having a spot of luck (such as being there at just the right moment to pick up a hefty fare). If you want a more statistical breakdown of what you might be able to earn as a taxi driver in your area, try this site.
The cost of a taxi licence appears to vary according to the region of the UK where it operates, but the average seems to be between £250-£300. The Government provides more detailed information on Official Taxi Licence Fees and the procedure for obtaining a licence.
Even though the taxi-driving sector is going through some fundamental changes, it’s not a difficult business to enter. Nevertheless, as with any business venture, there are certain steps that are wise to take before grabbing your car keys and driving around looking for a lucrative fare. Some of the following information may appear obvious, and much of it is applicable to any startup, but potential starters miss steps out at their peril.
The most common path is for you to start out as a self-employed taxi owner with your own vehicle. As you build a regular (and, hopefully, loyal) customer base, you’ll inevitably come across other drivers and chat to them, perhaps helping you to make contact with local businesses or organisations which need taxis regularly and could provide you with a predictable income stream. As we’ve mentioned, most taxi drivers are self-employed, which gives you the chance to choose your own work patterns. However, bear in mind that peak times tend to be late evenings and weekends so you may end up working unsociable hours at least part of your working week.
Again, this depends to a certain extent on the choices you make in your business plan, especially about the vehicle you are going to use in the first instance. That will be your single biggest cost.
Finding out about the specifics around start-up costs is clearly part of your research but you also need to recognise the distinction between fixed costs and variable costs of which fuel is probably the biggest. Check the vehicle’s fuel economy figures to calculate probable costs. After your vehicle, your next biggest fixed cost will be taxi insurance, so it’s essential to get the right advice on specialist taxi insurance protection.
Uber’s model is potent in its simplicity. Passengers download the Uber smartphone app, which then gives them the chance to virtually ‘hail’ the nearest available car and request a journey to their chosen destination. An onscreen map shows them how close to their location their taxi is, and approximately how long it will take to arrive. Uber sets the fare and the passenger pays through the online platform. Uber takes around 25% and the driver keeps the rest. So, Uber doesn’t own cars and it doesn’t have employees as such. It contracts drivers who are happy to work on the basis of getting guaranteed fares, at least during periods of high demand.
The company uses the increasingly popular dynamic (or ‘surge’) pricing model, where the cost of a ride fluctuates according to supply and demand. Periods of high demand, such as Saturday nights, mean higher fares.
Like many other companies operating in the ‘sharing economy’, Uber says it isn’t a taxi company but a platform which facilitates an arrangement between a service provider and a customer (just like AirBnB).
This Guardian article tells the very interesting story of Uber’s ‘conquest’ of the London taxi market. Reading the comments made by Uber drivers gives you an insight into the mindset required for working in the ‘gig’ economy.
Drivers who work with Uber are classified as independent contractors, not employees, so they are not entitled to the minimum wage, paid vacations or health insurance. However, estimated earnings for Uber drivers do not account for costs incurred during the trip but only for Uber fees. Although it can be a tough and time-consuming way to make a good living, especially when supply outstrips demand, the upsides to this kind of model for drivers are that;
Becoming a taxi driver and/or setting up a business with a fleet of cars requires you to master the ‘ins and outs’ of how to drive for maximum efficiency so your revenue stream increases, but it isn’t going to be a rocket ride to riches. Manage expectations initially, because drivers making a high salary for themselves (or even working for Uber) have put in a lot of hours to get to that place.
As for the taxi driving profession in the long term, technology looks set to have a big impact on the industry and change the way public transport operates for good.
Developments for self-driving or ‘robotaxis’ are already taking place, but there is still a long way to go in terms of creating a self-driving model that has the safety and trust aspects of a real-life taxi service.
As a taxi driver, you’re spending a big chunk of your working day on the move, whether it’s in heavy traffic or the open road. As such, you are at a proportionally greater risk of being involved in an incident or accident than the average road-user. For that reason alone, taxi drivers can expect to pay higher premiums, despite being some of the most experienced drivers around. There are also other variables which determine the type of coverage. We specialise in taxi insurance, so visit us to get a quote to make absolutely sure you have the best deal and the right coverage for your particular circumstances.