Cabcharge – Australia’s virtual taxi monopoly – faces reduced fares during off-peak hours from competitors such as gocatch, Ingogo and Uber, as smart phone algorithms supporting alternative taxi booking services continue to improve. Uber fare reductions up to 40% in Sydney?
The ABC’s Background Briefing reports that:
“The taxi industry is ripe for reform. High fares and the skyrocketing value of taxi plates ensures big returns for the big players — like Cabcharge — but passenger numbers are in decline and drivers’ wages have collapsed. What’s needed is an injection of real competition and choice.”
“Key elements within the industry have focussed largely on maintaining high licence values… shielding anti-competitive forces within the industry and shoring up the position of licence holders, large fleet operators, taxi networks and other protected stakeholders, wrote Professor Alan Fels in September last year.”
Drivers can’t afford a AUD $500,000 taxi plate, so they pay someone who owns the plate a ‘bail-in fee’ of 50% of their shift takings.
Many drivers use multiple booking networks to take as many fares as possible; their average annual income is down to $29,000 from $47,000 not so long ago.
Ingogo’s Hamish Petrie says ‘absolutely’ there should be price competition and price elasticity has become important in attracting drivers. Recently Ingogo ran a month trial offering registered drivers a $20 commission to pick up potentially drunk passengers in Kings Cross in early weekend hours. There was a 170 per cent rise in the number of passengers picked up.
Some drivers are already saying they are getting more jobs from goCatch than their networks and Victoria, with NSW expected to follow, has introduced legislation to say drivers do not have to belong to a network.
GoCatch’s Andrew Campbell says:
“We charge the driver a variable fee based on the value of the job and how busy it is: it’s a dynamic algorithm, that charges on the current demand.” The Weekend Australian, 24-25 May 2014
Both Ingogo and goCatch agree:
“It’s going to be a bit difficult for taxi drivers – those guys are below the minimum wage usually and with something like this they could be earning even less..
Prices could only drop if fees charged for taxi licences and other operational costs were also dropped.”
Ingogo‘s founder is Hamish Petrie joined by key members of the original team behind ticketing company Moshtix.
Uber is Google-backed
goCatch is backed by James Packer and Seek co-founder Paul Bassat. Andrew Campbell is co-founder and CEO.
Are algorithms addressing market failure?