Staying in the driver’s seat

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Mark Brownlee
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Mobile technology threatens to displace dispatchers

From inside a single-storey east-end office, Hanif Patni is figuring out how to stay on top of an industry that some startup entrepreneurs want to make obsolete.

Mr. Patni is the president of Coventry Connections, the company that dominates the Ottawa taxi dispatching market and is making inroads in southern Ontario cities such as St. Catharines and Niagara Falls.

Once it starts dispatching West-Way Taxi cabs later this year, Coventry will be directing more than 1,000 of the approximately 1,200 cabs in Ottawa.

In an interview at his Coventry Road office, Mr. Patni said demographic shifts are boosting demand for his company’s services. The population is aging, and many seniors are choosing or are forced to stop driving, prompting them to use alternative forms of transportation such as taxis to get around. Similarly, fewer and fewer young people are opting to own their own vehicles.

But challenges are emerging on the horizon. App developers are producing digital products that directly connect drivers to their customers in cities such as Toronto, leading some to believe the traditional dispatch service may at some point be a thing of the past.

 

MOBILE STARTUPS

Companies attempting to bypass traditional taxi dispatch services using smartphone app technology have expanded across the globe during the past few years. One such company, U.K.-based Hailo, has set up shop in Paris, Boston and Barcelona, and as close by as Toronto.

The firm wants to expand to Ottawa, but there’s just one problem: the city’s taxi industry, as it stands now, won’t allow it.

Hailo’s value resides in its ability to shorten down time for drivers by allowing them to pick up a fare using the app, in between picking up calls from a traditional dispatch service.

Riders can call a cab using their smartphone and, according to the company, get in the vehicle faster than if they called dispatch.

But it doesn’t appear as though the technology is coming to the nation’s capital any time soon. Justin Raymond, Hailo Canada’s president, met with officials from the City of Ottawa and the area’s biggest taxi union in December to present information about his company’s product.

“We didn’t get any indication from them that there was a strong urge to change,” said Mr. Raymond, adding, “Complacency has set in in the Ottawa market.”

The company faces a series of obstacles to moving into Ottawa, he said, but the biggest resides with the arrangement the city has set up for taxis.

All drivers are required to be part of a union and they have to be tied exclusively to one fleet. That means that unlike in Toronto, Ottawa cabbies can’t pick up a fare from, say, Hailo, while waiting for a call from their dispatch service.

Coventry’s Mr. Patni argues Hailo and its ilk should be forced to register as a dispatch service and have its own cabs.

“If a Blue Line cab is picking them up and then something happens – there’s a crash or the person who is getting into the cab slips and falls down – who does the customer go after?” said Mr. Patni. “If we booked the job and we’ve sent our cab down for the job, we are responsible for everything.”

For his part, Hailo’s Mr. Raymond said the company registered as a dispatch service with the City of Toronto.

 

VIEW FROM CITY HALL

Neither the City of Ottawa nor the union that represents drivers appear to be preparing for an influx of new taxi services in the coming years.

Coun. Mark Taylor said new additions to the taxi industry in Ottawa will have to work with the system already in place, adding that the city doesn’t plan on making too many changes.

“As the new technology emerges, we’ll certainly look at it and see the opportunities for us to fit into Ottawa so that it works well for customers – that’s our kind of job No. 1 as the regulator – and then works well for the drivers,” said Mr. Taylor, who chairs the committee that regulates cabs in the city.

New mobile apps present several challenges, he said. He wants to make sure they are responsible for riders’ safety in the same way a traditional fleet dispatcher is, for example.

 

DRIVER’S PERSPECTIVE

Amrik Singh Dhami, the president of the city’s cab drivers’ union, said the group has met with third-party app developers and is currently studying their proposals.

However, he says he’s still unsure about how the company would handle the taxi industry’s largest customer in Ottawa: the federal government. The taxi companies currently have agreements with most federal departments so employees can use paper taxi chits, a system that would be difficult in the short term to migrate to an app-based system.

“To be honest … we still don’t know how this thing is going to work,” said Mr. Dhami.

New entrants into the market, such as taxi app developer Hailo, feel this is exactly the sort of mentality that keeps Ottawa behind the times.

Hailo’s Mr. Raymond said it would be much cheaper if the federal government used its technology to allow employees to pay for their cab rides.

 

INCUMBENT ADVANTAGE

The taxi industry is heavily regulated by the municipal government, meaning cab fares in Ottawa are the same regardless of the fleet service a customer chooses. That, combined with the flat $10 fee Coventry charges its drivers for use of the service each day, means Coventry’s revenues are fixed.

“In this business, if you want to succeed and if you want to do a favour for your drivers and charge them very low rates, your cost of operations has to be low,” said Mr. Patni.

Coventry does this by controlling a large number of the city’s cabs under one umbrella.

Some fleets, such as Blue Line, are both owned and operated by Coventry. For others, such as Capital Taxi, Coventry simply provides dispatch services for a fee.

The company achieves economies of scale by sending out all the requests for service it receives, regardless of which fleet it is, through the same call centre. Even the fleets it runs in southern Ontario are dispatched from the same one-storey building on Coventry Road in Ottawa’s east end.

Its buying power also gives drivers special “taxi stands” at landmarks such as city hotels, where only cabs that are under the dispatch service’s banner can sit and wait for fares.

Coventry is also innovating and developing apps of its own. Mr. Patni said customers will be able to pay for their cabs using their smartphones later this year.

Hailo said it charges 15 per cent of the money the driver collects when picking up a fare using the service. Mr. Patni said his company’s flat fee equates to about less than one per cent of what a driver makes in a day.

Mr. Patni believes he’s well-positioned to deal with these threats that are creeping into other geographic markets.

“I think what we’re doing is we’re rising up to that challenge at the same time,” said Mr. Patni. “We’ve got a fairly good opportunity for us in the future.”

 

 

SIDEBAR: Taxis in the city

Blue Line: 540

Capital: 233

DJ’s: 76

West-Way: 318

Executive: 6

 

Source: Linda Anderson, chief of bylaw and regulatory services for the City of Ottawa.

Organizations: Blue Line, Capital Taxi

Geographic location: Ottawa, Southern Ontario, Coventry Road Toronto Paris Boston Barcelona Toronto.VIEW FROM CITY HALLNeither

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