Is the taxi industry finally taking new technology seriously?

Published at Nov 11, 2015, in Features

The Australian Competition and Consumer Commission (ACCC) is holding fire on its authorisation of smartphone taxi booking app, ihail, further delaying the taxi wars that are currently gripping the nation.

Disruptive technology vs archaic systems and protocols have fuelled the angst between the traditional taxi service and upstart Uber, however through the ihail app, the taxi industry hopes to make up some ground.

However it will have to wait until at least February or March 2016, when the ACCC is expected to hand down its final warning.

The delay is in line with a submission by ihail today with regard to proposed changes to how its booking app will operate.
Last month the ACCC said in a draft determination that it was proposing to deny authorisation to ihail on competitive grounds.

ACCC Chairman Rod Sims said: “The ACCC considers that the ihail app would have a significant impact on competition in the taxi industry, which could impact prices and quality of service.

“The ACCC accepts this app would provide a more convenient way for consumers to book taxi services, but in the draft determination the ACCC takes the view that this comes at too big a cost to competition.

“The ACCC estimates that the initial ihail shareholders represent more than half of all taxis in Australia, and a larger share in the metropolitan areas where the app would operate.

“This would guarantee that from its launch, the ihail app would have a larger fleet of taxis, in a broader range of locations, than any existing taxi booking apps. Depending on the rate of take up of the ihail app amongst other taxi networks, it could potentially grow to include all taxi networks in any area.”

“There are a number of apps that already provide access to large fleets of taxis across multiple locations. The growth in these existing apps is being driven by competition to attract drivers and customers. ihail will achieve a potentially dominant position from launch – not through competition, but because of the larger fleet of taxis its ownership structure delivers.

“The ACCC considers that the proposed arrangements are likely to produce significant public detriments. They will reduce competition between taxi networks in supplying services using the ihail app and, the arrangements may tip the market towards ihail becoming the dominant booking app.

“If it becomes the dominant booking app, it may also reduce competition by impacting the commercial viability of existing apps operated by individual taxi networks, as well as those operated by third parties such as goCatch and ingogo,” explained Chairman Sims.

Further disruptors

goCatch and ingogo are further spanners in the digital disruption of the taxi industry.

Recently taxi booking app goCatch signed a deal with ASX-listed Mint Payments to hijack the lucrative payments market from start-up rival Ingogo and major incumbent Cabcharge.

“Roughly half of all taxi jobs in Australia are hailed from the street or taxi rank, representing a big opportunity for goCatch to monetise payments for these journeys,” goCatch chief executive Ned Moorfield told The Australian Financial Review.

Cabcharge sees this as an ‘invasion’ into its terriroty, but is suffering on other ways as well after regulation in NSW, Victoria and WA cut its 10% surcharge by half applied on credit and debit card transactions for taxi trips.

Traditional players have been hit hard as a new world order stakes its claims.

And we should see further changes to come and those old reactionary companies phased out if they do not take a pro-active approach.

Taxi industry gets the message

At least the taxi industry has finally come to realise this and is looking at how technology can enhance its service offering and rebuild its reputation, rather than just conducting half-baked rallies that a new and better informed general public scoff at.

To be fair the taxi industry says it only wants to bring to light the lack of regulation afforded Uber, but Uber’s counter claim is that the protest was driven by taxi investors not drivers.

The only winner here is technology and the taxi industry has seen the light, finally admitting that it is behind the times and abandoning its attack on Uber.

It is now taking measures to win back consumer confidence.

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