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A New NYC Taxi App Shows There's Still Hope for Cabs

Uber has had a big head start with its ride-hailing app, but the taxi industry is finally getting serious about their own.

New York City finally has an app to let you hail a taxi with the tap of a button. (Flickr/Justin Maalihan)

Making customers stand on the corner of a street and flail their arms to catch a cab is just not cutting it anymore. Nowadays, we expect to get a ride at the tap of our smartphones. So after years of frustration over the success of ride-hailing apps like Uber’s, taxi drivers in New York City are finally fighting back with their very own e-hailing app.

Called Arro, the app was created by taxi industry veterans and functions much like Uber’s app: You simply tap “Order a Taxi,” and the app will alert the closest taxi to pick you up. Then when you’ve reached you destination, it automatically charges the credit card you’ve linked to your account. Its designers say it’s faster and more reliable than Uber’s app—and there’s no surge pricing. The app is currently being tested in 7,000 cabs but will eventually be available for 20,000 taxis throughout New York.

New York City is the latest city trying to make taxis relevant again by tapping into people’s preference to order up transportation on smartphones—something cities and transit agencies have been maddeningly slow to embrace. But recently, cities including San Francisco, Chicago, and Washington, D.C., have all either made it mandatory for cabs to use existing e-hailing apps or started building their own. In fact, D.C. just began testing its very own Universal D.C. Taxi App, and Chicago is close to selecting which service to use.

But is this enough to dethrone Uber or Lyft?

As The Atlantic reported, Uber’s ride-hailing app provides almost half of all paid rides in major U.S. markets, according to one report. Alternatively, taxi ridership in New York fell by 8 percent between 2012 and 2014. And past apps have done little to close the gap. The D.C.-based app Curb, formerly known as Taxi Magic, launched in 2009—before Uber—works with 90 cab companies in 60 cities but has largely flown under the radar. The London-based Hailo app barely lasted a year in the U.S. before pulling out in 2014 because of the aggressive price war between Uber and Lyft.

“I dont think that this is a settled market,” says David King, an urban planning professor at Columbia University. He’s been studying the taxi industry for six years and remains fairly optimistic about its future. “Uber clearly has a head start, but it’s not obvious that Uber is going to be the leading taxi company in 10 years,” he says. “They’re losing money constantly, they’re subsidizing a lot of their trips, and they’re battling every government on the face of the earth.”

In other words, Uber is making very risky business choices. For instance, the company is testing a new pilot program that takes up to 30 percent commission from drivers, which will hit part-time drivers the most. “That seems excessive,” King says. “Drivers are going to migrate [to different companies] and consumers are going to be largely indifferent as long as they’re providing a safe and clean car.”

Outside the U.S., these apps and the taxi industry have fared better. Hailo has largely found success in Europe and Asia, in part because “regulators see more importance in how the taxi industry supports the citizenry,” chief operating officer Tom Barr told Financial Times in 2014. “We do see better support for taxis in those markets. It’s a friendlier environment to grow in.”

In Korea, the taxi hailing app Kakao Taxi is only 2 months old, but has come out as a strong competitor to Uber after the latter had to suspend its peer-to-peer service for not complying with local regulations. Kakao Taxi’s parent company, Daum Kakao, is even considering taking services to the U.S.

King says there’s no doubt that U.S. will see more taxi-hailing apps in the near future, and drivers will switch to ones that serve them best. As will consumers, who will largely pick services based on price and convenience: “We’re still at a point [where] there hasn’t been a price competition among the tech-enabled taxi companies.”

“This is a very young process, and much more of an evolutionary process of the taxi business than it is a revolutionary one of the technology,” he says. But he adds that the local government can’t just be bystanders. “The cities and the states have a role to foster entrepreneurial approaches to taxi services, and they should make sure that they don’t regulate these out of business.”

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