Blogs & Comment

The future of taxis is here, but not without enemies

A new app called Hailo lets you beckon Toronto cabs with the press of a button. Some big cab companies see it as a threat.


By now, we all know how the Internet and smartphones are revolutionizing everything they touch. From music, to movies, to publishing, to even cooking and health care, ubiquitous digital networking is throwing everything up in the air. We’re still waiting for a lot of those things to come back down and figuratively land, but there’s good reason to believe that what we’ll end up with will be better, more efficient and possibly even cheaper.

Would you believe we can add taxis to that list?

This past weekend, my wife and a friend of ours were looking to take a cab over to a Halloween party. We didn’t want to wear big jackets over our costumes, so standing out on the street to wait for one wasn’t really an option. The natural choice was to call a taxi, but then I remembered an app for iPhones and Android devices that I’d recently received press releases for, called Hailo. I decided to give it a shot and installed it.

You start by creating an account, complete with a real name and credit card number. I felt comfortable enough providing that information, knowing that I’d seen legitimate press releases and had passed by the new Hailo office located near my house. The process even lets you set your desired tip amount.

Once you’re registered, all you do is launch the app and request a cab. Hailo uses your phone’s GPS to locate you then displays the cabs in your vicinity. You select where you want to be picked up, at which point you’re told how many minutes it’ll be. When you make the official pickup request, it only takes a few seconds to get a confirmation from a driver on the other end that he or she is on their way. You even get their name and phone number in case you need to contact them.

On the way to our party, we were picked up in a Hailo branded taxi, where the driver was a partner in the company (we waited only three minutes). He told us that any cab company’s drivers are allowed to use the app as a sort of alternative dispatch, and that about 700 or so in Toronto are in fact already using it (the app is also available in six other cities: London, Madrid, Chicago, Boston, New York and Dublin).

We liked Hailo so much, we used it on the way back too. In both cases, the drivers were ecstatic about the service because it’s another source of customers and it provides a good deal of certainty. Not only is it safer for drivers because they have more information on their fares, customers who order the taxi but then ditch it are also charged an inconvenience fee. For fare seekers, it’s also a great service because it’s fast, friendly and there’s no need for payment at the end—the amount goes directly on your credit card and you’re emailed a receipt.

Drivers and customers can also rate each other. Our experiences were so pleasurable in both directions that everyone involved got five stars.

Existing taxi companies, however, aren’t rating Hailo very well. Not surprisingly, some are taking issue with the upstart providing an alternative dispatch service to drivers. Hailo and Beck, one of the biggest taxi companies in Toronto, are currently in something of a war where the app upstart is accusing its bigger competitor of bullying drivers. Beck is threatening to discipline its drivers, Hailo says, while the larger company admits that it doesn’t like its employees using the service.

“When you’re in a Beck Taxi, the service being offered through the Beck Taxi radios are for Beck taxis.… You work for one company or you work for another,” a spokesperson told the Toronto Star.

The drivers we spoke to considered themselves to be independent contractors who are free to use whatever means available to get customers. They also expressed displeasure with existing dispatch services, as well as their general treatment by large cab companies over the years. Hailo represents to them an opportunity to take some of the power back. “We’re getting revenge,” said one of our drivers.

The company, meanwhile, makes its money by taking a cut of the fares. Drivers pay 15%, versus 30% to 40% with regular taxi companies, Hailo says. If that’s so, it’s no wonder drivers prefer the upstart and that traditional companies are upset. If two dispatch calls come in at the same time—one from Hailo and one from the old guard—it’s no secret which one the driver will go for. The dilemma for traditional taxi companies sounds very much like the one for book publishers, which are seeing authors defect to self-publishing through the likes of Amazon, where royalties are much higher.

The dispute seems like a losing battle for Beck and any other traditional taxi companies that try to hold Hailo back. Even if they are successful in arguing that drivers are contractually bound to use only one dispatch service, how exactly would they enforce such a scenario, short of banning drivers from having smartphones?

As such, we can add taxi companies to the long list of traditional businesses that are trying—ineffectively—to hold back the sweeping changes being ushered in by digital networking. The Internet revolution for cabs looks like it’s here to stay. As with every other business touched by this technology, the old guard is going to have to innovate—and possibly distribute its pie better—if it is to survive.