BLACK TAXIS vs PRIVATE HIRE: Who’s winning in the London market?
The long-running competition between London’s black cabs and private hire vehicles (PHVs) is more than a numbers game. While private hire cars far outnumber black cabs, sheer volume does not tell the full story. Earnings, regulation, operating costs, and working conditions all play a role in determining who is really coming out on top.
Market Saturation vs. Driver Shortages
London’s PHV sector has expanded rapidly in the last decade, with tens of thousands of drivers signing up to work for app-based operators. However, the flood of new drivers has made the market increasingly more saturated. There are currently over 107,000 private hire drivers licensed by Transport for London (TfL). Can demand for services keep growing with the ever expanding number of drivers?
In contrast, the number of licensed black cab drivers has fallen in recent years. Many left the trade during the pandemic, and fewer new drivers are passing the rigorous Knowledge of London test. As a result, demand for black cabs has remained high, giving drivers more consistent work and the ability to earn higher fares with fewer hours on the road.
Cost of Entry and Vehicle Choices
One of the biggest challenges facing black cab drivers is the cost of a new taxi. The latest electric black cab, the LEVC TX, costs over £70,000. While financing options are available, it is a significant investment that locks drivers into long-term commitments. There are also strict licensing requirements that limit the type of vehicle a black cab driver can use, leaving little room for cheaper alternatives.
Private hire drivers, however, have far greater flexibility. They can choose from a wide range of vehicles, selecting one that suits their budget and work patterns. Some opt for affordable second-hand cars, while others invest in higher-end models to cater to premium ride services. This flexibility makes it easier for new drivers to enter the private hire market without committing to large upfront costs.
Regulation and Licensing Hurdles
London’s black cabs operate under stricter regulations than private hire vehicles. The Knowledge of London, a test requiring years of study, remains a major barrier for those looking to become a licensed taxi driver. While this ensures high standards of service and navigation skills, it has contributed to a decline in new recruits. However, with demand high and a shortage of cabbies, applicants must weigh-up the long-term investment.
Private hire drivers, on the other hand, do not need to pass such an extensive test. Licensing requirements are less demanding, making it quicker and easier to enter the industry. However, this has led to concerns around an ever-growing market hitting saturation point.
The Impact of App-Based Booking
Technology has transformed both sectors, but not in the same way. Private hire firms, particularly app-based platforms, have changed how passengers book rides. The convenience of booking through a smartphone has drawn millions of customers away from traditional minicab operators and appealed to new digital savvy generations.
There is however a downside, that being all work must run through operators who set the journey tariff. Recent action from the App Drivers & Couriers Union (ADCU) saw drivers calling for a 10% increase in fare value.
The black cab industry has adopted its own technology, with several apps allowing customers to hail a cab in a way that competes with private hire services and delivers on long-standing corporate account bookings. Taxi drivers can choose just how much or little they work the apps with more cost effective street work available to them too.
Who’s Really Winning?
The answer depends on how success is measured. If numbers alone decide the winner, private hire drivers dominate the market. However, market saturation, higher commission rates, and increased competition have made earning a living more difficult for PHV drivers recently.
Black cab drivers, while fewer in number, benefit from higher demand and regulated fares that ensure a more stable income. Yet, the high cost of vehicles and barriers to entry continue to challenge those in the trade and those wanting to join the ranks. But then if something’s worth doing… it’s not always an easy ride to success!
