While many people think of the Internet first as the source for email and web searches, economists and business people refer to it as the Great Disrupter. The many online services launched in the past two decades present new ways of doing things in many market niches, and they often offer better, faster, and cheaper alternatives. From major retailers to airlines, business owners and managers have found their companies under pressure to adapt or die. Increasingly, anyone running a taxi service is now faced with this dilemma.
Born in a Time of Transition, Surviving in a Time of Transformation
Just a little over a century ago, the new-fangled autos with combustion engines created havoc among horse-driven Hansom cabs in New York and other cities. Within a decade, the six-hundred cars with green and red panels imported from France dominated the short-haul passenger service in New York. These vehicles, using a primitive mechanical metering device called the taximeter, quickly became known everywhere as taxis.
In the decades since their introduction, taxis have become a standard service in cities and towns throughout the world. Long before automobile ownership became standard, the taxi was the accepted way to get around at an affordable price. In the larger cities, taxis were seen as important services that required regulation and control to avoid gouging and ensure minimal levels of safety and service.
New York and other capital cities came to rely heavily on their taxi services to service remote airports and keep traffic flowing in metropolitan areas. As a result, many of the taxi service companies are now entrenched in their markets, and competition has been minimized by economics and regulatory burdens for a number of years.
The Advent of the App
The new capabilities presented by the Internet and smartphones have changed that play along, get-along environment for every taxi service. With the increasing popularity of various online car services, many taxicab drivers find themselves unable to compete. Instead of stepping off a plane and going to a long line of awaiting taxis, thousands of business people every day, as well as others, simply use their smartphone to set up a ride in a private car or limousine.
Statistics show that ridership in regulated taxis has dropped by as much as 65 percent, creating hardships for both the existing taxi companies and the government agencies responsible for regulating traffic from hired cars. In a number of cities, dealing with the invasion of the app-oriented businesses is a major issue causing a great deal of controversy.
While no one is sure how this transformation will eventually shake out, virtually everyone acknowledges this is another disrupted industry that will never be the same.
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