Mobile Hailing Apps as a New Trend

Mobile Hailing Apps as a New Trend

Mobile hailing apps such as Uber and Hailo have become popular in recent years. They offer ridesharing services for customers with smartphones. The mobile app requests rides and tracks the location of the customer. Upon completion of the trip, customers will be billed via registered credit cards.

The introduction of apps that enable passengers to share rides that would normally be purchased or used individually does raise concerns for the existing taxi and limousine industry. With the trend of mobile hailing apps expanding, and the increasing number of new mobile hailing services, the new upcoming industry could be a very strong threat to current industries where one party of passengers use one vehicle to move from point A to point B.

Already very popular in Paris, London, New York, Chicago, Sydney, Singapore, Seoul, Brussels, mobile hailing apps still face many implications to enter existing taxi markets. Local regulations make it very difficult for mobile hailing services to be hosted in cities such as Vancouver and Toronto.

In Vancouver, the incumbent taxi industry, local government, and provincial government have sent out a clear message that says they do not want mobile hailing apps, such as Uber, in the current market. Uber was once in the Vancouver market, but was pushed out due to the regulatory implications that made it close to impossible for Uber to enter.

Ride sharing is going to be popular for many reasons, especially for its positive environmental effect. Mobile hailing services will allow passengers to share rides to similar destinations, removing the need for excess vehicles going the same route and decreasing negative environmental externalities by lowering the usage of empty taxis.

Introducing mobile hailing services to a region with incumbent taxi services will disrupt normal economic conditions. The creation of this new extension in the taxi industry will not spear out traditional taxis completely, but it will create a redistribution of market share based on each individual’s willingness to pay.

Passengers who want to travel around with higher comfort than public transportation but lower priced than traditional taxis will choose to go with mobile hailing service where they may be paired with another party going to the same location along the way. Traditional taxis will not lose all market share as passengers who choose to retain their comfort in a personal space will be their target market.

It would be very beneficial for the public to be given the choice between traditional taxi service and mobile hailing service when they are in the market to purchase transportation from point A to point B. In Vancouver, local authorities are not issuing permits for mobile hailing taxis to protect the incumbent taxi industry however it would be very beneficial to consumers. Introduction of mobile hailing system will dilute traditional taxi industries, but it will create competition for lower and economical pricing for transportation.