Why Uber is killing the Taxi business

I liken taxi companies to pure print publications in that they have both failed to advance with the times and are now paying the price of stiff, sophisticated and modern-age digital competition.

But unlike print publications, which will always have their intrinsic physical virtues, there’s really nothing saving the classic taxi and its driver from complete and utter extinction.

Of course, the tipping point is some years away, but the signs are more evident than many in the industry are willing to admit and for those that hold taxi licenses or have invested in them in the last few years, the grim financial situation should be all too apparent.

The disruptive storm of ride sharing apps such as Uber and Lyft (not yet in Australia) took advantage of what many have hated about the taxi experience for decades, but have had to endure due to lack of choice.

As a consumer that spends at least $150 a week on Uber on average, which was previously around $300 on cabs, the experience of spending less money for a better service has been life changing.

But while the cheaper prices for Uber (which will no doubt rise as the service becomes more dominant, as per any monopoly) are one of the reasons the service has become popular, the main reason is the experience.

For decades taxis have been treating their customers like cash cows, slugging us with unreasonable fees for an inferior service. The employment of under-skilled and over-worked drivers has more often than not delivered a customer experience akin to a Vodafone technical support centre. In fact, I am sure I have heard taxi drivers making sales calls while driving.

Besides, how can a company such as CabCharge still justify a 10.0 per cent processing fee for credit card payments in 2015? How does a credit card processing fee increase as the fare gets longer?

Ultimately though, Uber’s sense of seamlessness and convenience is what appeals most.

When I leave Brisbane every Tuesday morning for my regular 9am flight to Sydney, I step out of the shower at 7:45am, order an Uber on my watch (call me a wanker, but it’s one button), get dressed, track the Uber car’s progress, walk outside and the car has arrived or is no more than two minutes away by around 8am.

The destination is pre-set, the car is clean, the driver speaks English and is capable of actually driving. I get to the airport at 8:30am at the latest and not once in the last nine months of Uber usage has this process failed. The bill? About $30.

Not too long ago I had an issue with Uber when for about two weeks I couldn’t log in to my account and hence the app refused to work. I had to catch cabs only. I decided it would be an interesting comparison test between Uber and Taxis.

I downloaded multiple taxi company applications, which aim to mimic Uber functionality (poorly). In my first go the taxi arrived 40 mins after being called as the first driver cancelled the job after 15 minutes of having accepted it, which resulted in a missed flight.

The week after, the result was much better, though the fair was $68.

To make matters more entertaining, in that same week I caught a cab from Melbourne airport, having waited in line for more than 30 minutes, only to have the cab driver go straight for the petrol station and only turn the meter off after being asked. Twice.

I took a few quick photos of the experience, which the cab driver protested I legally couldn’t do (I could only assume he had failed law at university). He then insisted that I get out of the cab and catch another one unless I let him delete the photos I took on my phone.

There was a moment of pity, I considered deleting it so as to not cause him concern (which is why I have blurred both his face and licence number in the photos to protect his identity, and job) but ultimately, this is the true sad tale of the taxi as we know it.

The experience of catching a taxi is not great. People are generally fed up and Uber presents a very attractive alternative.

The problem with taxis is attitude, price and customer service. I once had a heated argument with a cab driver that insisted he can drive better with one hand (on top of the steering wheel) than with both hands on either side of the wheel, because “I do this for a living, mate”.

For those that follow me on facebook or twitter, you may find my constant posting of how taxi drivers hold the steering wheel somewhat amusing (or annoying as hell), but sometimes I genuinely fear for my life when I am in a taxi. To be fair, Uber isn’t perfect either. I have had some shocking drivers. But then I can rate the poor ones, so they don’t stay around long term.

Then there’s that whole notion of insurance, which the taxi companies will tell you is the main reason you should not use Uber. This is rubbish.

There are now multiple insurance companies that actually cover Uber drivers and their passengers, and even if the driver’s insurance doesn’t cover you in the event of an accident, Uber has its own insurance, which will then step in.

The other perpetual myth is that Uber drivers will get massive fines for operating a taxi illegally, this has seldom been done in practise and when it has occurred, Uber has paid the fine for the said driver. It’s hard to beat that, really.

Ultimately, however, this goes beyond Uber vs taxis. This is evolution. This is the losing struggle of print against digital played all over again in a different field.

The accusations and fear mongering from the losing side will go on for some time, but the result is already clear to anyone of moderate intelligence. Uber has won.

When I was in New York for the auto show in April, the number of Uber cars around was staggering. Not only that, but Uber even offered pick up and delivery services, so you could order food from your favourite restaurant that doesn’t offer delivery and have an Uber driver pick it up.

Have something urgent to send across town but can’t do it yourself? Get an Uber driver to be your delivery man. The possibilities are endless.

If you want some further proof of the impending taxi doom, Google owns a big chunk of Uber, if you use the Google map app to enter a destination, it quickly gives you the option to call an Uber to make it happen, you really can’t lose from there.

As far as the automotive industry is concerned, there’s a lot of benefit to Uber’s popularity too. Plenty of Uber drivers I have met are university students who have bought a brand new car and use Uber a few days a week (thanks to its flexible hours) to pay for the repayments and get some spending money.

That means second hand cars are no longer the only option for students. That has plenty of upside.

But the real future for people transport is autonomous cars. That’s where Uber will either completely own the market or lose it entirely.

The future involves having your fully autonomous car out and about working while you’re in the office. Uber takes charge of your car and you get paid for the fares it brings in. It simply goes around picking up and dropping off passengers. It sounds like a novel concept, but I can assure you it’s already well on its way.

This is why Google is investing in autonomous driving technology and also why it owns a chunk of Uber. It all adds up.

In many ways owning a car in the mega-cities will become somewhat superfluous as an Uber car will be just a few minutes away at all times.

But while all that remains to be seen in the next decade or so, what is obvious even today is that the taxi as we know it is dying a slow and painful death.