In the future, every car is going to be part of the future personal transportation service. If there’s a vehicle with available empty seats going to same direction than you are, the chances are that you’ll get onboard with that car. Things are changing – the younger generation no longer sees owning a BMW as something cool, but however, getting from place A to B with just a few clicks on your iPhone is something they want. There are already several startups offering services to get you from A to B but they are struggling with various problems, and to be honest, the current services are not yet truly disruptive either. Yet based on the initial success of these services one may be assured that there is also a true revolution in the personal transportation coming up. Strong resistance from the traditional taxi companies and taxi associations is only one proof of that.
In the previous three posts the problem, solution and a practical example to future of personal transportation were discussed. In this post it’s discussed whether the currently existing taxi industry is able to respond to the challenge or not.
It’s quite likely that people will even in the future want to get from place A to B. It’s also likely that the most convenient method of transportation is often selected. Some of the trends indicate there might be room what I call Personal Transportation Service as the younger generation may no longer want to own a car, at least in the cities. The revolution starts with one-off rides and currently the taxi industry is perceived to be under attack. Startups are offering taxi-like services with Black Cars and even with people’s own private car (so called community-driver approach). It’s not going to stop there, however. These one-off rides are only small part of the actual traffic volume in commuting, for example. Obviously, if convenient public transportation is available, that’s also high volume service.
Being a pioneer means fighting challenges
The startups offering new solutions are facing numerous challenges related to pressure to decrease the price, supply of drivers and last but not least, the strengthening opposition of the incumbent taxi industry. The service concepts are likely to need ridesharing options in both the Black Car and community-drive approaches in order to offer rides for such a price that would enable mass-adaptation of the services. That will introduce another problem for the new kids on the block. Currently, the startups are using drivers are “contractors” and drivers are not actually employed by the Black Car companies. That was recently ruled to be acceptable as the drivers can choose their own hours, are not restricted by geographical limits and are free to accept/reject any trip offer. The inevitable addition of ridesharing option to the service concept will partially change that. When offering ridesharing trips (actually, taxi-sharing), the business reasons are likely to dictate that the driver mainly must accept any trip offered for him and the driver’s app will tell where to go next to pick up or drop off somebody. So the chances are it’s one step closer to employer-like activity.
Smart taxi companies would be winners, if they’d choose to
All this represents a huge opportunity for the existing taxi companies, if they just choose to be a bit less reluctant against new innovations than they are now. In many countries, the taxi industry is highly unionized, dispatching logics vary and the industry sees the inefficiency as a good thing as more taxis get passengers. That’s unlikely to continue, increasing prices after decreasing demand is not a thing to do in normal market economy.
Any taxi company with reasonable number of vehicles could start their own ridesharing service and start offering innovative services. That would require changes in the attitudes but in the long run might save the industry before the self-driving taxis take over. At least would offer good resistance. There was an interesting concept marketed by a german Taxmobil company last year. The idea was to offer a flat-rate taxi service in Frankfurt for just 48 euros per month. The service is not up and running yet so nobody really knows whether it’s for real or not. But the idea is interesting so it’s likely that one day somebody will actually do it as well.
It’s highly likely that even an innovative incumbent transportation company would (or will) go wrong by figuring out with their management consultants that the primary factor for a user when choosing how to commute/travel would be just the cost of the trip. Couldn’t go more wrong! They might be also be convinced that creating ridesharing software for that service would be relatively easy, just combine some algorithm guys with a coding team. Wrong again! That’s a great formula to lose money, market and the momentum, nothing else.
So it’s that easy. Oh wait, maybe not. There must be a reason why this is not done in massive volumes yet. And what is the right approach then?