Analysis
13 Apr 18

Taxis, the fittest or the strongest?

In many cities taxis have had to defend their position against newcomers. Protests against Uber are perhaps the most visible signs of the changing scenery. However much they fight, the industry might have to adapt eventually if they want to survive.

The strongest

Taxis have been a part of the daily mobility culture in cities for centuries. In the urban centre they peacefully co-existed with public transport and outside of the centre they are a convenient way to provide first and last mile journeys. By offering flexible and personal mobility, they could be part of the trend to create overall first-to-last-mile mobility offers. Nevertheless, these services could be offered by ride hailing companies as well.

The fittest

In many cities the taxi sector obtained a ban for ride hailing companies, in others the ride hailers are penetrating the market. Innovation might be the key for the sector to position itself in the changed mobility market.

Smart booking and digital dispatching

One of the main reasons why customers prefer ride hailing is the booking procedure. Rather than flag a taxi on the street, ride hailers can be booked via smartphone applications which allows the rider to receive a price and time simulation prior to booking.

Digital dispatching or smart booking services could provide taxis with a similar convenient booking method. Several tech companies have already set up cab-hailing services or applications such as Mytaxi (recently merged with Hailo), Taxify, and GETT.

Artificial Intelligence 

The incorporating of Artificial Intelligence (AI) allows taxi companies to adapt the fleet to demand, such as higher demand during bad weather conditions, certain events, or at peak traffic times. This adaptation serves both taxi driver, by optimising the driving time and reducing dead heading miles, and rider, by reducing waiting times.

Since taxi companies are working with their own drivers, they have more power to manage their fleet than ride hailing companies who work with self-employed drivers. In order to address this issue, the latter adjust the fares according to the cars available, and hence manage the passenger flow, rather than the driver flow.

Automated Vehicles and robot taxis

Fully autonomous taxis take smart taxis to a next level. Nayva, for example, develops fully autonomous, electrified, and smart shuttles. At the moment, a pilot of Nayva is about to start at the French airport Charles de Gaulle which will run until July 2018. The extremely dense traffic situation, including lots of pedestrians, is similar to a city, the habitat where automated taxis could operate one day. Similar to Nayvas’ project is a pilot project of the American start-up Voyage in a retirement community in San Jose (California). Voyage will extend its operations towards cities in a later phase.

The World Economic Forum (WEF) states that an efficient and automated system of robot taxis could lower the number of cars in cities by 40%. However, the WEF admits that it would be more likely that autonomous vehicles make up only 2% of new vehicles sales globally by 2025. The adoption could be sped up if costs dropped significantly and if cities are willing to introduce new mobility systems more quickly. Investments of automotive companies, regulatory changes in favour of electric and autonomous taxis, the fall of car ownership in cities, and rising urbanisation and traffic congestion rates are determining factors to enhance the implementation of robot taxis.

Car makers are entering the autonomous taxi market as well, in a bid to address the future demand for Mobility-as-a-Service. And ride hailing companies like Uber, Lyft and Didi are known for high investments in self-driving technology. Owning or managing their own fleet of robot taxis could address the financial and practical issues ride hailing companies face regarding their drivers.

The fittest and the strongest

In the meantime, while robot taxis and artificial intelligence are being developed, shared taxi rides could bridge the gap between ride hailing and taxi services. The HubCab project in NYC calculated that nearly 80% of all NYC taxi trips could have been shared trips as people tend to commute on the same routes. In theory, streets would be less congested, passengers would have to pay less and carbon emissions would be reduced. In real world conditions, however, there might be psychological and practical barriers to implementing this system.

Author: Fien Van de Steen