Taxi drivers are DIVIDED on whether licensed taxi drivers should be able to charge surcharges on top of the metered fare.
As the demand for taxi and private hire vehicle (PHV) services grows, the controversial option of charging customers more than base fares to guarantee them a vehicle is splitting the industry in two.
The PHV industry, including global app operators, has used the “surge” model for several years when demand for service exceeds the supply of available vehicles. Being unregulated, they have more flexibility to charge what they want, when they want. It is then up to their customers to accept the price or seek alternative transport instead.
But what do licensed taxis do in times of high demand? On the street and at taxi stands, the passenger only pays the metered fare. Fares are already set to encourage taxi drivers to earn more when demand is traditionally higher on weekends or later at night. This is a long-standing trusted system that works for both driver and passenger when it comes to hailing a cab.
Away from the street, on taxi apps and account platforms, it’s different. Since the price may be announced to the passenger before the reservation is confirmed, extras have been added for several years.
According to a short online poll, it was 50/50 on whether licensed taxi drivers should charge for extras. This included ‘break-ins’, reservation fees and priority fees, but the survey excluded additional drop-off and airport pick-up fees.
In the 1990s, the radio circuits that held accounts with most of the large multi-million pound companies in operation charged a ‘run-in’ fee on top of the metered price to secure a taxi for their employees. It was a way of hailing the nearest taxi from a distance that drivers of the day welcomed and companies were ready to use when needed.
The method of charging passengers the cost of ‘break-in’ has all but disappeared in the UK, but is still used in other European countries to this day.
Since the introduction of ride-sharing apps in the early 2010s, “run-in” fees have been waived in an effort to compete with discount fares offered by newcomers like Uber. Instead, taxi companies were forced to offer fixed price fares LOWER than the estimated cost of the meter to earn work on the account.
Fast forward to post-pandemic and demand for licensed taxi services has returned. Black cab booking apps have seen a surge in demand. Gett recorded more than 17,000 uncovered jobs in a week as taxi drivers struggled to cover demand in the capital. It should also be noted that fixed price tariffs have now been discontinued.
FREE NOW has introduced reward programs to incentivize taxi drivers to cover more work on their platform as well. However, with busy street work, the option to pay no app fees and drive no dead miles to the pick-up destination could mean operators can continue to struggle for digital coverage of drivers.
So how can taxi operators ensure that those who need a black cab get a black cab? In recent years, Gett has introduced a “Tech Fee,” which is essentially a reservation fee, to be paid in addition to the metered rate during times of high demand. The fee, which is capped at £13, allows customers and drivers to pay or receive the fee for priority booking.
And therein lies the big point of contention because obviously some passengers who regularly use the black cab service and see themselves as loyal customers are unwilling to pay more to give themselves priority for a taxi. It’s also worth remembering that many customers ARE willing to pay a booking fee.
The same goes for taxi drivers working on the platform. Some are comfortable receiving the extra payment, others less so.
Could app companies offer the CHOICE to pay reservation fees to ease concerns of those affected? For example, customers who are unwilling to pay the extra will normally enter the platform looking for a driver willing to accept the job. If after a few seconds there are no more drivers around, it is perhaps then that the passenger could be invited to encourage a taxi driver first?
Street hail and metered pricing should never change. It is a regulated fare based on IMMEDIATE booking of a service that protects both driver and passenger. However, what happens BEFORE the passenger enters the taxi and how that passenger locates the taxi is still highly debatable.