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May 30, 2014updated 22 Sep 2016 11:30am

Will taxi apps kill off the London’s black cab business?

Analysis: Industry turmoil leads to office brawls and high court battles.

By Jimmy Nicholls

As black cab drivers scrawled the word "Scabs" onto the offices of the taxi app firm Hailo, there could scarcely have been a more apt image for the confrontation between the old industry and the emerging might of Silicon Valley.

Right now the battle between cab app firms such as Hailo, Kabbee and Uber, against London’s iconic black cab and minicab firms shows every sign of escalating. Uber chief executive Travis Kalanick’s speculation that the firm’s fleet of cars could one day be self-driving is unlikely to reassure drivers, and many cabbies are scared that their livelihoods are being snatched.

Yet taxi apps do not hold all the cards, at least in London where black cabs enjoy some legal protection. Uber may soon be hauled into court over their app, which calculates fares by relaying the distance and time taken to a computer server. Cabbies have argued this is effectively a taximeter, which private hire vehicles are banned from using, but Transport for London (TfL) did not see it that way, and has invited the high court to adjudicate on the matter.

Firms like Hailo argue that if cabbies isolate themselves from the apps they will be wiped out. Writing in an open letter announcing the decision, Ron Zeghibe, chair of Hailo, said: "There is no point burying our heads in the sand – people want a choice and taxis need to be in the mix. A taxi-only app will get isolated and customers will take their money to services without any cabs on offer."

Within days the firm’s London office had been stormed by those who disagreed. But others believe cabbies have worse to worry about than the big app companies. Speaking to CBR recently, Dave Walker, chief technical officer at Kabbee, said: "Potentially there are apps out there which are more destructive to black cab markets because they are breaking the law."

Taxi law has been a particular problem for governments as a rash of car-sharing apps such as Uber’s have recently entered the market. Though politicians love to extol the environmental virtues of sharing private transport, such measured arranged between strangers has led to a deep furrowing of brows among legislators, particular those who have campaigned hard to raise awareness of the dangers of unlicensed minicabs.

France’s stronger union culture has proved particularly pernicious in this regard, with French legislators looking to placate taxi unions with a ban on apps letting people find drivers through GPS. "This is a big problem for us. It is cutting one of the features of the app which is about making it simple to order a private car," said Pierre-Dimitri Gore-Coty, a regional general manager for Uber, talking to the BBC. "This is all about protecting the taxi industry and is not serving consumers in any way."

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Yet union complaints are not purely self-interested. Traditional taxi drivers are subject to different legislation than private hire vehicles, and some unionists argue the market is tilted in favour of the newcomers right now because of the restrictions. As such the Licensed Taxi Drivers Association (LTDA) plans to stage a protest in London in June by clogging up the arteries of the capital with its members’ cars.

Responding to TfL’s decision not to take action on taxi apps, Steve McNamara , LTDA general secretary, said: "The taxi trade have no confidence in TfL and its legal team whatsoever and we will be issuing proceedings of our own. This attitude demonstrates why we are being forced to demonstrate. TfL is simply not fit for purpose."

The trouble for McNamara is that customers are mostly interested in finding the best deal. Behind the pretentious guff about "disruption" is the hard fact that like other digital industries before it, cab apps are offering consumers more choice and better prices. Whatever the judgement of the high court, if black cabs cannot compete the market will eliminate them.

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