INDUSTRY EXPERT REFLECTIONS
that box. The operator is no longer in charge of this problem, the power is firmly with the driver, and the customer is no longer defended by the operator. The operator is merely the channel to enable the ‘trade’. What do I mean by ‘trade’? Whether we like it or not fares/passengers are now a tradeable commodity! Drivers have formed a fragmented, entrepreneurial and fluid source of supply compared to yesteryear when they were a unified fleet available to an operator to softly direct. Customers have a lower level of loyalty to individual companies and instead want to shop around for speed and price and play one app off against another. Surge pricing, off peak discounting and the rest has been enabled by technology and have become a feature of the service.
So perhaps it has come to the point where however reluctantly we accept that a fundamental change has occurred, we now need to react to it. Perhaps as operators we redraw our territory, what we are responsible for and the relationship between customer and driver? If we do, I suggest that pricing moves firmly out of the operator’s hands to become a trade between driver and customer. So how would this work? Could journeys be traded like any other commodity? Yes fairly easily, every operator now operates a platform and every driver and passenger has an app. It’s in effect journey eBay. Dynamic, online trading is likely to be the latest revolution in how the industry operates.
Let’s say the operator sets a base fare of £10.00p minimum and £5.00p per mile and the driver sets his/her app to show he/she will work for 75%, 100%, 150% of the base fare so he/she receives only bookings from customers that meet his/her criteria. The fare/quote is calculated using the criteria set by the driver. The customer likewise indicates on their app that they will pay 75%, 100%, 150% of the base fare and the booking only gets offered to drivers who are willing to meet that criteria. It won’t solve all the problems but at least the driver and customer get to make their own decisions. In effect this is already happening albeit in a messy and painful way, all this does is to technologise it.
Systems will need to be smart so if the customer sets say 50% of base fare and no drivers are available to undertake the trip based on that criteria, they get a message to say you could have a driver in three minutes at 125% of the base fare. Likewise drivers could
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be told that there are X fares at Y% of base fare within five minutes of where you are. Its simply trading.
Where to start
Someone needs to be first if the trade does move to resolve what is a fundamental change to our industry and it would be foolhardy to jump in with both feet. Maybe certain journeys, certain times could be a good start. Get the customers and drivers comfortable with taking their own decisions and then gradually move it to 24/7. The technology providers in the industry need to be looking at how they could support this because the status quo will not lead anyone to the cheese!
Will customers like it?
Some customers might, some won’t, but who likes their daughter stranded in the middle of a city centre, late at night surrounded by drunken yobs? The key difference between a system like this is that drivers get a tool that enables their entrepreneurship and assists them to provide a profitable service and customers have a tool to make their journey attractive to drivers. Yes there are a million reasons not to even consider it e.g. all customers will set the app to 50% of the base fare and all drivers will set their app to 200% of base fare – but empty cabs and stationary passengers prompted a few times to be sensible will introduce some pragmatism to the situation. This might be preferable to some ham-fisted legislation or regulation and reduce worker status risk.
Whether you agree or not with my analysis, let’s be clear the cheese has well and truly moved!
MAY 2024 PHTM
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