Hailo Ups Its Minimum Fare In London To £10, Triggers Licensing Complaints

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Another chapter in the ongoing saga between city cab regulations and on-demand taxi apps: cab app Hailo, which in London relies on a portion of the city’s black cabs to power its taxi-hailing-on-demand service — meaning it is bound by the same minimum fare regulations attached to London black cabs — has raised its minimum pricing in the city.  Hailo operates in a range of cities globally, including New York, Toronto and Chicago, tailoring its pricing to each market.

In London Hailo’s minimum fare has gone up to £10 between 6am to 10pm Monday to Sunday; and £15 between 10pm to 6am. The problem is that licensing regulations for black cab drivers stipulate they can’t charge more than a £2.40 minimum fare at any time.

Transport for London (TfL) confirmed to TechCrunch that it is investigating complains following Hailo’s price hike. “We are investigating complaints about Hailo introducing a minimum fare policy.  It is against the licensing regulations for any taxi driver to charge a customer more than the metered fare.  Action will be taken against any driver found to be doing so,” noted Helen Chapman, TfL’s General Manager for Taxi and Private Hire, in a statement.

The sharp-eyed among you will have noticed that Hailo’s prior minimum fare also broke the regulatory minimum. Despite the fact it has technically been breaking TfL regulations since it launched its service two years ago (with a £5 minimum), a TfL spokesman said he is not aware of any instances of a Hailo-using driver having had their licence taken away as a result of a complaint about charging more than the regulatory minimum.

Complaint investigations are on a case-by-case basis, into individual drivers. There is no wider investigation into Hailo’s practices, he confirmed. A Hailo-using driver losing their cab licence as a result of such a complaint is “theoretically possible”, he conceded.

A spokeswoman for Hailo reiterated that the startup has always charged a minimum fee in London. Asked about TfL investigating complaints about the price hike she described it as being engaged in a “conversation” with the local authority cab licensing body.

The rational for Hailo’s price hike is to attempt to encourage more black cab drivers to sign up to use the app — since they are guaranteed a base fee of £10, even for a short trip. More cab drivers using Hailo means app users having a bigger pool of cabs at their command and therefore less time waiting around to be picked up (or poached by a non-Hailo using taxi).

At present, Hailo has some 14,000 black cab drivers on its books, out of a potential pool of 24,000, according to the spokeswoman, so there’s evidently room for growth.

“The updated minimum fares  help Hailo to continue to increase cab coverage across London whilst still passing on savings to our customers by providing all the benefits of their service which include: no booking fee or billing the customer for the cost of the journey to the pick-up, five minutes free waiting and arriving at their door in two taps with all of the information on the cab driver that will be picking them up including a photo,” she said.

“If the fare on the meter is more than the minimum charge, we will not charge more than the meter, but if the fare is below we will charge for the provision of using our service — the ability to e-hail a cab which will arrive within minutes and include contact details and license plate of your pick-up driver. This will also help ensure you get a cab when you really want one.”

On the one hand it’s the classic story of dusty regulations not keeping up with changing technologies times. But, on the other, a £10 minimum does sound pretty steep vs £2.40 — as alternative Twitter-based cab hailing system, @tweetalondoncab, points out:

tweetacab

Hailo points out that only a small proportion of cab journeys conducted via its app fall under its new minimum fare. The “average minimum charge” is £15, according to the spokeswoman. And just 15% of journeys fall under the new higher minimum fares. Ergo, if the amount on the meter is less than the minimum you are required to pay then that extra money is going to pay for the convenience of the service vs standing around hoping a black cab will chance to drive by.

“This upfront, transparent and fair pricing model means that we can continue to provide a fare with no hidden charges, and will increase the likelihood of our customers being able to get a cab,” she added.

Those arguments may sound convincing but convincing arguments take time to overturn regulation. In the mean time, the issue is that black cab drivers using Hailo in London are breaking licensing regulation when they ask for more money than is displayed on the meter. And since Hailo’s minimum charge has been increased, drivers are probably going to be breaking the terms of their taxi licence* more often than they were before (and customers may be more inclined to complain about the higher minimum).

At the end of the day, Hailo may well be upping its minimum fare because it feels it can get away with it — having carved out a dominant position in London vs other cab hailing apps.

Hailo provided the following stats on its London usage:

  • Over 3 million jobs in London
  • At least 5 million passengers (based on 1.5 people per cab)
  •  Just under 400,000 registered passengers

And if it gets more black cab drivers registered, that lead will only increase, cementing those higher minimum charges.

Hailo

*London cabbies aren’t always averse to breaking the terms of their licence — just try and get a cab to take you South of the river after hours and see how many drivers speed off in search of another fare when they hear where you want to go