Handing victory to the competition

On Wednesday morning I had arranged to meet a friend for coffee. I was looking forward to seeing her and didn’t want to arrive late, so I decided to take a taxi – quick, and not very expensive for short routes, at least in Madrid. I should have walked. Forty minutes later it dawned on me that there were no taxis, not even full ones. I went to the three hotels near me, no taxis. Then it started to rain. So I sent a damp and apologetic text and slunk home. Should I have known that there was a taxi strike? Yes, obviously. Should they have gone on strike? No, doing so did them so much more damage than good.

empty taxi stands

image via El País

The taxi strike was Europe-wide, and its main objective was to “protect the consumer against unlicensed taxi rides”. Yes, I’m sure that our welfare is of significant concern, but not even the strikers themselves bother to deny that the strike is to protest the encroachment of Uber on their livelihood.

Now, it’s worth noting that Uber is not even in Madrid yet. It does operate a limited service, in Barcelona, which interestingly enough did not have a city-wide taxi strike. So most of our fair city had never heard of Uber. Now they have, and a large percentage of them are liking what they hear. Uber’s downloads have grown by over 800% this week compared to last. UberMadrid’s Twitter page already has 164 followers at time of writing, without ever having issued a single tweet.

UberMadrid Twitter

a snapshot of UberMadrid’s Twitter page on the 15th of June

It is also worth noting that I have nothing but good things to say about the taxi service in Madrid (in spite of being seriously pissed at them on Wednesday). It’s relatively inexpensive compared to other European cities, they all have GPS so not knowing where they’re going is not the problem it once was (I once took a taxi to the airport and had to tell the driver how to get there), they’re no longer allowed to smoke in the vehicle (definitely an improvement) and they have pretty much all of them been pleasant.

I do understand their position. After putting up huge licence fees (between 80.000€ and 200.000€) and struggling through reams of administrative hassle and enduring a significant crisis-induced slump in business, along come the under-cutting Uber drivers with much fewer requirements and restrictions. It does not seem fair.

But rather than “How can we stop the competition from coming?”, why are they not asking “How did we get in this position in the first place?”. Why do the taxi drivers have to pay such high licence fees? The reason given is that they are a government-approved monopoly, a public service with a more-or-less “guaranteed” income. But, if they are a public service, why are they allowed to strike without at least guaranteeing a minimum service and being held to standards of good behaviour (no destruction of property, no violence), a “privilege” not granted to other public services?

A sector-wide strike against fair and inevitable competition is futile and self-defeating. Even Neelie Kroes, the Vice President of the European Commission, stated publicly in a fascinating post that the strike is pointless: “We cannot address these challenges by ignoring them, by going on strike, or by trying to ban these innovations out of existence.”Imagine the hotel sector going on strike to protest against Airbnb. The only ones that were negatively affected were the taxi drivers, through a day of lost income, and their clients, through a day of transport hassle. The yet-to-arrive competition is happy with the major and free publicity.

Rather than taking clients away from the traditional taxis (although that obviously will happen), Uber and its peers see their service broadening the market. More cost-efficient taxi rides, less will-I-find-a-cab uncertainty, and the social aspect do make finding a ride through Uber more appealing than standing on a street corner with your arm raised, especially among the younger users.

Taxi drivers are going to have to accept that change is inevitable. Whatever laws the respective European governments implement to protect an antiquated monopoly, their market will be eroded, and they would be better off lobbying for lower licensing fees and more entrepreneurial freedom (= fewer restrictions) than giving huge free publicity to the enemy they fear. As Marc Vidal says in his excellent post “Taxi drivers use Uber”, “To continue regarding a taxi license as an investment is a mistake that many are beginning to realize”. He also says that he knows taxi drivers who are signing up with Uber, taxi drivers who realize that adapting and innovating goes beyond having magazines and wifi connection in the back seat.

It is interesting that no protest has been made against the Spanish government’s decision to allow testing of driverless cars on city streets and highways. Now there’s a coming disruption for you.

 

 

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