I have been taking taxis in Dublin for more than 40 years. I have never been offered a discount on the metered fare, nor thought to ask for one. It was only this week that I became aware that taxi drivers can even give you a discount. This nugget emerged from the row between taxi drivers and Uber, the “ride-hailing” business that has led the disruption of the taxi markets across the world since it launched in San Francisco in 2011.
Taxi drivers – some of them at least – are up in arms at Uber taking advantage of this little known, and in my experience entirely unused, discretion on the part of taxi drivers, as a way of introducing dynamic pricing for journeys. Since November, Uber customers have been offered the choice of a fixed fare or the normal metered fare. The fixed fare is calculated by Uber using data on traffic, time of day and demand. The customers pays the lowest of the two.
What is not to like about the prospect of paying less than the metered fare? Quite a lot, according to taxi drivers.
They warn that fixed fares are just the thin end of the wedge and that Uber’s ultimate goal is to undermine the system of regulated fares, at the expense of taxi drivers’ livelihoods. They claim it’s a model that the company has used elsewhere.
RM Block
Whatever Uber’s intentions are in this situation, it certainly has a bit of form when it comes to “Dr Evil”-type scheming. In 2016, this paper reported on Uber’s legal but unsuccessful lobbying to have rules blocking its expansion into Ireland loosened. The reporting was part of a collaboration with the International Consortium of Investigated Journalists based on files leaked to the Guardian.
The taxi industry, for its part, fought doggedly against deregulation in 2000, which saw the value of taxi plates plummet from six-figure sums to almost zero. They have flexed their muscles again this week, staging a protest during rush hour in Dublin last Wednesday that followed a similar protest last month. The organisers claim that more than 1,000 drivers took part. And now they intend to stage a six-day protest targeting Dublin city centre and Dublin Airport from next Monday in a “major escalation” of the dispute.
But even if the taxi drivers are right and Uber’s fixed fares are a stalking horse for something much bigger, should we care?
In theory, one of two things should happen now. The first is that fixed fares will fail because the taxi market is already so competitive that drivers simply cannot afford to take a passenger for anything less than the metered rate. Unlikely.
The second is that drivers will take passengers for fixed fares, because it’s still worth their while financially. It won’t happen overnight but that is how it will shake out. In theory, passengers can’t lose.
There certainly seems to be enough competition in the market for what economists call the hidden hand to work its magic. According to research by the National Transport Authority, about three-quarters of the country’s 17,000 taxi drivers source fares via apps. Almost all of them – 93 per cent – use Freenow, which is owned by Uber’s German-based rival Lyft. Forty-three per cent of drivers have Uber and 13 per cent have Bolt. It is pretty clear that a lot of drivers have two or three apps and pick and choose fares from them.
Of course it is not quite that simple – it never is.
Were Freenow to follow Uber’s lead and bring in dynamic pricing – which Lyft uses in other markets – the nightmare scenario taxi drivers warn about would become a bit more realistic. Drivers would have little choice but to take the fixed fares and, as a result, many of them might decide to exit the market because they couldn’t make a living. This would not be in the interests of either Uber or Lyft. It is the point at which the Government – in the form of the regulator – may need to step in. It currently says its powerless to stop Uber bringing in fixed fares.
It will become clear in time whether Uber is simply trying to win market share with a clever and entirely legal tactic or is actually hell-bent on upending the regulatory framework, as the taxi drivers claim. The drivers don’t want to wait to find out, and want fixed-fare schemes prohibited.
In the short term, punters are not going to object to potentially lower fares – assuming, of course, that they can actually get a taxi in the first place.
