In London, Uber is facing a challenge in renewing its five-year contract. Transport for London (TfL), which governs the city’s complex transit system, has limited the ‘ride’ app to a four-month extension, and it’s not yet clear whether the renewal will be granted. The feeling in the market seems to be a resounding ‘yes’, but I’m not so sure.
Citing a rising chorus of objections that Uber threatens both public safety and its drivers, the TfL’s move seems to tilt the advantage toward the city’s iconic black cabs, which have over 350-years of history. But sadly, TfL can still expand Uber’s contract for another five years. And while this expansion may mean cheaper and more convenient rides for customers, it will come at the expense of London as a brand, damaging a city once known as one of the world’s best for transportation. Yes, black cabs are traditional. But we know people’s loyalty will switch in an instant if they have something that provides a better and more relevant customer experience.
Uber has been winning Britons over since it entered London in the summer of 2012. And its performance here has been similar to the thousands of other cities it operates in. It has become so popular that it’s turned into a brand name for a taxi. Just as people say “Let’s Google it” as a generic term for search engines, “I’ll get an Uber” is now shorthand for any private hire car. And the change has crippled local cabs, with many drivers saying their income is down by as much as 25 percent.
Uber Drivers vs. London Taxi Drivers
The Advantages of London Cabs
While that’s been true in every city that’s welcomed Uber, comparing London’s cab drivers to others is like comparing Big Ben to a sports watch: London’s taxi service has often been considered the best in the world because the drivers know the quickest routes through the city’s complicated roads. There are thousands of streets and landmarks within a six-mile radius of Charing Cross, and anyone who wants to drive a London cab must memorise them all. Known as the Knowledge of London, this encyclopedia of maps has been the cabbie’s standard since 1865. Typically, it takes students three to four years to master.
The Advantages of Uber in London
By comparison, all that’s required to become an Uber driver is a car, a phone and a valid driver’s license. And while Uber and other ‘ride’ apps can’t offer any of the black cab’s history or tradition, it offers Londoners something more relevant: More rides, at better prices. “The success of Uber doesn’t stem from technology that’s made hailing a taxi much easier – Hailo, Gett and MyTaxi all do that, but none of them has had the same impact as Uber,” we noted in our recent report, Success in FinTech: Are Most Getting It Wrong? “Uber’s success comes from putting more cars on the road, thereby increasing the supply of taxis when you need one. It’s not about the tech or the app (although they help!), but about meeting a real and important customer need: When I want a taxi, I want it now, and I want it to come to me.”
Why cities are fighting Uber
Of course, Uber is far from perfect. Besides losing money faster than any other tech company – $2.8 billion in 2016 – many consider its business model unsustainable. Others call its “sharing economy” promise parasitic, and say it mistreats drivers. Controversial founder and CEO, Travis Kalanick, is famous for a culture of bad behaviour, temper tantrums and sexual harassment. Earlier this year, its decision to serve New York airports in the midst of President Trump’s travel ban was interpreted as being intensely anti-immigrant, sparking a #deleteuber protest. And in the most pointed anti-people move yet, the company failed to turn off its surge-pricing feature following the recent terror attacks in the capital. While Uber was overcharging distraught bystanders, London cabbies were graciously driving them home for free.
What’s Next for Uber?
And certainly, London could ban Uber. Plenty of places have, including Austin in Texas, the state of Alaska and Italy in its entirety.
But London cabbies haven’t moved with the times. It’s taken them until January of this year to make sure all cabs have card machines, for example, and getting a receipt is still a hassle. And as their numbers continue to dwindle, more private-hire cars enter the market. In the last five years, the number of black cabs has fallen by 2,000, while 30,000 more private-hire cars have taken to the road.
Uber, like it or loathe it, has adopted a model of ruthless expansion. It is no longer just a cab company, but a transportation network. When TfL makes its decision, will it be willing to disrupt Brand London in favour of the upstart? The most relevant brands aren’t those that only rely on history or tradition, but those that provide the best customer experience. When it’s dark and rainy and you just want to go home, history is meaningless. But “Your Uber is arriving in 1 minute” will always be welcome words.