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Mobile app drives digital disruption for London taxi company

Tom Kaneshige | March 12, 2013
Mobile transportation apps like Hailo and others have forced traditional taxi companies to pull a strategic u-turn. Here's the story of how 60-year-old Radio Taxis Group of London has gone digital and mobile to catch up to Hailo's disruptive powers.

They chose: "Radio Taxis, London's Black Cab."

By tapping into the power of their existing brand, the app wouldn't look like a late-entry newcomer to the crowded taxi app space. Nearly everyone in London has been inside a Radio Taxis cab or heard of the company or seen its logo. Radio Taxis Group also hopes to blunt the Oldsmobile-effect of the word "radio" in its name with marketing collateral pushing the company's initials, RTG.

"If you talk to people in London, they know the name Radio Taxis-and that it delivers a cab," says Brown. "In these kinds of meetings, you start to remember all the things you're good at."

Radio Taxis Group also has history on its side. It started out as a cooperative in London in 1953 and became a privately-held company in 2004. Radio Taxis Group employs some 300 people in operations and support but doesn't actually own any cabs.

Taxi drivers are independent operators who join the Radio Taxis Group network, or circuit, to find passengers and pick up fares. They pay 60 pounds per week for the privilege. They also must adhere to a strict code of conduct and agree to background checks and possible training.

There are more than 23,000 licensed taxi drivers operating in London today. Some 2,500 are on the Radio Taxis Group circuit, although this number is dwindling due to the high subscription fee. In comparison, half of all licensed taxi drivers in London use Hailo, CEO Bregman claims. It's a sure bet there's a lot of overlap with taxi drivers signed up on multiple circuits, although Radio Taxis Group's official, hard-to-police policy is that drivers can't use other apps.

Hailo doesn't charge taxi drivers a subscription fee and instead takes a 10 percent cut of a fare on a trip originating from the Hailo app. Passengers can use the Hailo app for free, but if they request a trip on Hailo and don't follow through, they may be charged anywhere from $1 to $1.50 via their credit card on file. (For more on Hailo, check out Hailo Picks Up Speed as a Digital Disrupter for Taxis.)

Hailo is causing Radio Taxis Group to re-think its entire business model. In order to stem the tide of fleeing taxi drivers on its circuit, Radio Taxis Group plans to reduce subscription fees later this year. Lost revenue will be made up by charging drivers some percentage of the fare, just like Hailo. Initially, the new mobile app will be free for passengers to use, but Radio Taxis Group might tack on a "convenience" fee later.

Both Hailo and Radio Taxis Group agree that mobile apps have transformed the taxi business because they're so easy to use. Passengers who would have called private transportation for the convenience or wouldn't go to a party across town due to the hassles of finding a cab are instead using Hailo. Taxi drivers report an average 30 percent spike in business with Hailo, Bergman claims.

 

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