WILL COVID-19 LOCKDOWN MEASURES SIGN
This month we welcome the following contribution from Ian Miller- ship of LVSA, whom many PHTM readers will know from having conducted unmet demand surveys in their district.
A key feature apparent in each of the many licensed vehicle survey projects that we undertake around the UK, is the variety in area char- acteristics. No two areas are the same in terms of how licensed vehicle businesses operate, or indeed, the profile of passenger demand.
In some areas, large corporate enterprises dominate private hire pro- vision, hackney carriage provision or even both fleets. At the other end of the spectrum, in some areas the market is dominated by smaller independent operators. Generally, licensing areas fit some- where within this spectrum, with a tendency towards larger corporate dominance, over time.
The existence of what some may consider to be the traditional taxi, with a public hire licence, which relies solely on hires obtained by hailing from the roadside or hire off the ranks, is becoming increas- ingly rare. More and more often, independent hackney carriages are turning to booking circuits to obtain hires, to supplement rank-based hires, or personally obtained bookings from regular clients. Similarly, independent private hire owner operators who previously relied on regular client lists, built up over the years through word of mouth and local advertising, have lost market share to major booking circuits.
The rise of Uber and Ola and the response to these through use of independent app based systems to enable local companies to com- pete with these international giants, has squeezed the smaller independents in recent years.
COVID-19 IMPACTS
Measures employed to slow the spread of Covid-19 have led to many changes in society, with knock on changes to the way we travel, when we travel and how often we travel. Understandably, this has had an impact on all forms of public transport, including licensed vehicles.
Across the board, use of hackney carriages and PHVs by existing cus- tomers has dropped. However, some new customers have started using licensed vehicles owing to a variety of reasons, including, for example, changed work patterns, perception that licensed vehicles are safer to use or lack of available alternatives. The demand from new customers has generally not offset the drop in demand from tra- ditional customers and current levels of overall demand of 50% to 70% of normal are commonly reported.
WHAT MIGHT THE FUTURE LOOK LIKE?
So, how do new customers access available licensed vehicles? It seems the majority rely on current technology with internet searches and app based hires. This feature of the new customer market can lead to the exclusion of some independent providers. Coupled with the overall downturn in demand, often, independent providers have been harder hit than larger operators as the offset effect of new cus- tomers has not been as prevalent with smaller operators.
Widespread redundancies generally lead to an influx of people into the licensed vehicle trades. There have been indications that licens- ing authorities are experiencing increased numbers of new applications to become licensed drivers. Often, new entrants turn to the licensed vehicle market, without any consideration of market research and the likely level of demand for their services.
Without an established customer base, new entrants almost univer- sally join a booking circuit in order to obtain hires. In areas where
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saloon cars can be readily licensed as a hackney carriage, some new entrants may register their car as a hackney carriage and join the vehicles queueing on the ranks, often with the backup of paying for membership of a booking circuit as well. Many of the new entrants are disappointed with the level of demand for their services and leave the licensed vehicle trade within a year.
With the general drop in demand for licensed vehicle hire, some licensed vehicle drivers and owners have left the trades, either tem- porarily or permanently. As new drivers join, this can displace experienced drivers who leave the trade. Some licensed vehicle own- ers have laid up their vehicles. Some have been registered with SORN. As a result, in many areas, the number of licensed vehicles actually in operation falls far short of the numbers on the authority registers.
Similarly, in some areas the number of drivers actively working is far below the numbers licensed by the authority. There is some evidence that more expensive WAV-style vehicles are tending to be placed on SORN more than saloon vehicles where the hackney carriage fleet allows both saloon and WAV styles.
The impact of Covid-19 mitigation measures has accelerated the trend towards dominance of large operators of booking systems.
WHERE IT ALL THIS GOING?
Does any of this matter? Well, if you work in the licensed vehicle trades, clearly loss of income and security does matter to you. Some would advocate that market forces will prevail and a new equilibrium will emerge, where the supply of licensed vehicles will meet demand.
Perhaps we should consider why PHVs and HCs are controlled by licence? Ultimately, these licences are intended to protect the public and controls on licensed vehicles are intended to benefit the public.
Do the trends which have affected the provision of licensed vehicle services benefit the public? We have listed examples of a few factors which provide both benefits and detriments to the public.
• Growth in mobile app based choice provides the customer with more control and choice over travel. Feedback in most apps, with estimated wait times, provides a good indication of availability if a customer is wanting to travel immediately and they can choose which operator can offer the fastest pickup.
• Customers can shop around and choose between fixed price fares in some instances. This feature depends on local conditions.
• Increased hackney carriage membership of booking circuits can limit availability of hackney carriages at taxi ranks at peak times, if pre-booked hires are prioritised. i.e. where there are too many hackney carriages for purely rank based demand, they can become increasingly dependent on booking circuits, which can actually lead to unmet customer demand and queues at taxi ranks.
• Licensed vehicle drivers are pretty savvy about how to maximise earnings. On systems which operate variable pricing according to demand, a price increase can be triggered at busy times, by drivers logging off the system for a few minutes, to reduce the number of available vehicles and trigger a price rise, then logging back in to service demand at the increased prices.
• Dominance in a locality by a single operator can limit the potential for new providers to enter the market and compete effectively.
• Where an effective monopoly forms, this places control of pricing and supply in the hands of the operator.
OCTOBER 2020
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