Over the past few years, the most disruptive innovation in transportation has been sharing: Smartphone apps like Uber, Lyft, and Sidecar match up riders and people with cars in a seamless experience that cuts out entrenched taxi companies altogether.
But a whole other suite of apps are using similar technology to strengthen the regulated cab industry, rather than go around it.
Most emerging companies in the for-hire transportation space aren’t working with average Joes who drive in their spare time, like UberX does. Rather, they’re serving established taxi fleets that realize they need to replace their outdated phone-based dispatch system. These companies advertise their compliance with regulations as a feature, not a bug.
“We keep it professional,” reads the Web site of California-centric Flywheel, which says it “partners with taxis in your city so we always have plenty of cabs on the road to pick you up faster.”
Boasts Curb, formerly known as TaxiMagic: “Every time you ride with Curb you’ll ride with a fully licensed, insured driver. No exceptions.”
The same is true of Gett Taxi, Hailo, AsterRIDE and a bunch of digital design shops that make white-label apps for large taxi fleets. In China, meanwhile, Uber is up against two apps backed by two of the largest Internet companies in the world — and they work just with taxis.
So, why avoid “ride-sharing,” as the peer-to-peer services are known? Well, not everybody has millions of dollars to fight legal and regulatory battles that have come with some sharing services, as Uber has decided to do across the world. There are still plenty of licensed cab companies to modernize, after all, which comes with much less risk.
“Obviously we could open it up and let everyone download it,” says Travis Bashir, an analyst with Gata Labs, which has a taxi app used mostly in Canada. “That just seems complicated on the liability side for us. Our goal is to provide tech to local companies.”
Can existing taxi fleets satisfy the increased demand for rides unleashed by e-hailing software? And if so, does it make sense to ban unlicensed driving altogether?
Maybe. From a policy perspective, the argument is this: Ride-sharing undermines the tax base generated by regulated taxi fares and dilutes the amount of business available for the drivers who’ve long been able to count on cab work for their livelihoods.
Uber drivers, after all, appear to be a predominantly part-time bunch: 81 percent of the company’s “driver-partners” work fewer than 34 hours a week, according to internal data released last week, compared to just 19 percent of professional taxi drivers and chauffeurs. And it’s potentially much more profitable for an app to take a cut from amateurs, who largely avoid the regulations that traditional cabbies face, drawing complaints of injustice from the unions that represent them.
That’s where e-hail app companies can help. Rather than disrupting the taxi companies, they want to improve them.
“Circumventing the industry was never an objective,” says David Mahfouda, co-founder of a company called Bandwagon, which helps people coming from one place find other people going the same direction to split a taxi. “We were always of the mindset that we wanted to make existing systems better and more acceptable.”
At first blush, Bandwagon isn’t great for taxi drivers, since the service could lower the overall number of available trips. But Bandwagon also advocates for taxis to be able to charge more for taking on additional passengers, which isn’t always allowed under existing regulations. That increases the value of each trip for the driver, while also increasing demand by lowering fares for individual riders. Bandwagon charges the passenger a small fee, and large institutions — like trade shows or airports — pay to provide the service.
That’s why taxi companies are open to the idea. A recent MIT study found that taxis in New York City could have 40 percent more capacity if passengers split their fares with others going the same direction. That helps solve the problem of not being able to find a cab when you need one, weakening the argument for expanding the pool of drivers to non-professionals picking up fares on the side.
“I think they’re receptive because they understand that their industry is really threatened right now,” Mahfouda says. “The specific kinds of threats that the industries are under are ones that we can help with.” Bandwagon’s aspirations go even further: They’re considering creating a universal platform that would allow passengers to hail different services without having to download a new app in every city. An “Open Uber,” Mahfouda calls it.
“Interoperability is a very real opportunity. It’s just going to take a little longer,” he says. “To the extent that we’re seeing on-demand transportation becoming a utility, there need to emerge a protocol and a set of standards for how rides are ordered and represented.”
Mahfouda thinks cities and states may have to be proactive to tug taxis in a more efficient and accessible direction. Some jurisdictions, however, will decide that citizen ride-sharing should be a part of the transportation equation, as well. If that happens, and the regulatory landscape settles down, more companies that previously appeared loyal to taxis will probably start moving into the peer-to-peer business, too.
Take Opoli, a Los Angeles-based company that began as an airport shuttle service and now offers an app that allows riders to negotiate a price with drivers. It has only worked with black car fleets so far, but plans to qualify as a “Transportation Network Company” in California, which would allow it to venture into ride-sharing. Businesses will go to the most profitable sector available, as long as the risks aren’t too high.
“Our platform has no limits,” says Opoli founder Rattan Joea. “Our model, our platform, is we don’t regulate anything.”