London’s transport regulator, Transport for London, has released details of a new more expansive and expensive system of tiered license fees for private hire operators that will drive up the fees that ride-hailing companies like Uber need to pay to operate in the city.
Uber previously paid £2,826 for a five-year license from TfL. Under the new system the company would have to shell out £2.9M for a further five years’ licensing, a Transport for London spokesman confirmed to TechCrunch.
That’s the fee for operators of the largest fleets — with more than 10,001 vehicles. While firms with fleets of between 1,001 and 10,000 vehicles would need to pay £700,000 for a five-year license.
And while £2.9M is orders of magnitude larger than Uber’s 2013 fee, it hardly represents a sizable burden to the ride-hailing giant’s bottom line, with revenues hitting some $6.5BN globally last year.
Even if you’re looking locally — Uber claims to have some 3.5M users in London, so the new license regime is going to cost it as little as around 17p per user, per year.
However it is not yet confirmed whether Uber will be able to renew its license — a decision on that rather more salient point for its business is due by the end of this month.
The regulator previously extended Uber’s license, which was due to lapse in May, by four-months while it worked on the new pricing structure. And there have been calls, including by politicians, to strip Uber of its license in London.
Earlier this month a cross-party group of MPs wrote to TfL arguing that Uber is an “unfit and improper operator”, and accusing it of not doing enough to protect passenger safety.
Uber claims the contrary.
The regulator did order an Uber competitor, Taxify, to shut down earlier this month, immediately after it had launched in London — saying it was not clear the startup had a license to operate.
However it appears that Taxify had sought to shortcut TfL’s licensing process by acquiring an existing private hire vehicle (PHV) operator — an approach that clearly went down badly with the regulator. (Perhaps in part as it could be interpreted as an attempt to sidestep the larger incoming fees.)
The regulator says its new regime of higher PHV licensing fees is merited because the industry has grown “dramatically” since the last time fees were raised in 2013 — noting there were 65,000 licensed drivers in 2013/14, and more than 116,000 today; while it says the number of PHV vehicles has increased from 50,000 to 88,000 over the same period.
“With this growth, there has been a substantial increase in the cost of ensuring private hire operators fulfil their licensing obligations and in tackling illegal activity to keep passengers safe. It is estimated that over the next five years enforcement costs alone will reach £30M, up from a previous estimate of £4M,” the regulator writes.
“The total projected cost for licensing, enforcement and compliance for the taxi and private hire trades over the next five years is £209M,” it adds.
TfL says there are around 3,000 private hire operators in London, and close to half have 10 vehicles or fewer — with just five per cent of companies operating fleets of over 100 vehicles. Underlining quite how exceptional Uber’s position is in London’s PHV sector.
Commenting on the new licensing fees in a statement, TfL’s Helen Chapman, general manager of taxi & private hire, said: “There has been a huge growth in the industry in recent years and it is only fair that the license fee reflects the costs of regulation and enforcement.
“The safety of Londoners is TfL’s top priority, and the changes to fees will help us fund additional compliance officers who do a crucial job cracking down on illegal and dangerous activity. We have listened to the views of stakeholders in the consultation and have amended the fees structure to give small and medium-sized operators more flexibility in how they manage the size of their fleets.”
Also today, the GMB trade union handed a petition to TfL calling for it to insist on limits to Uber driver hours as a condition of renewing the license — arguing that limits should be imposed for public safety reasons.