Traditionally, most minicab operators charge fixed prices. This is so deeply ingrained in the London minicab industry that many think, incorrectly, that it is a legal requirement. All private hire operators can charge whatever price they wish. It can be time only, distance only like Addison Lee or time and distance like Uber.
The reason why fixed prices came about in the London private hire industry was simply to provide an easy quote system between London postcodes before computers were in daily use. Outside London most private hire operators insist that their self employed owner drivers use the same meter as the local taxis. Of course, in London, there is a specific law which precludes the use of meters in London minicabs. This Act of Parliament was introduced due to intense lobbying by the licensed London taxi trade.
So, what’s the best pricing structure? Clearly, in central London, from a driver’s perspective, it is time and distance. The days of fixed prices are coming to an end. More and more private hire operators in London are reporting that it is becoming increasingly difficult to cover work in the busiest central London areas because fixed mileage charges no longer adequately compensate their self employed drivers for their time.
A point of difference between Addison Lee and Uber is Addison Lee’s fixed prices. Even on account their prices are still attractive in many areas outside central London to self employed minicab drivers. Addison Lee is in a different league when comparing their service levels to Uber’s which are non existent. But still Uber grows. Cash and card work at Addison Lee is still very attractive at a fixed rate of £2.90 per mile for a Galaxy or £3.40 per mile for a Mercedes with a £25 minimum fare.
The difficulty is that covering central London work during busy periods for any London private hire operator when mostly account work at lower rates is available does not float the boat for many. The Achilles heel, major point of difference and advantage for Addison Lee over Uber is their fixed price structure. It is a conundrum that may need addressing this year. No doubt better minds than mine are working on a solution right now.
Due to Uber’s success in recruiting over 20,000 self employed London minicab owner drivers and planned growth to 45,000 self employed minicab owner drivers in the next few months congestion in central London at peak periods has now become untenable for other self employed minicab drivers to continue offering their services at fixed rates in many parts of London.
