By: Michaell Lange,
London, 16/04/16 –
The industry of minicabs and taxi drivers is not much different than other industries around the world. Industries follow a very similar pattern which covers demand and maximise profits. Like any other industry, there are different consumers with different demands which are usually defined by financial powers.
Your financial income will define the clothing you’ll wear, the car you’ll drive, the restaurants you’ll go to, the quality of services you’ll demand, the hotels and places you’ll go for a holiday, the supermarkets you’ll buy from, the airlines you’ll fly with, etc. This is why you can look around you and easily see why there are companies such as Asda, Lidl, Aldi and Iceland on one hand, and M&S and Waitrose in the other hand, as well as Morrison’s, Tesco and Sainsbury’s in between the two extremes. They exist to supply the demand of different groups of consumers asking for different types of products, qualities and prices. The same happens in most of other markets, where we can see the same pattern being followed by companies. You will decide whether to fly British Airways or Ryanair or EasyJet based primarily on your financial power.
Here in London, the minicab industry is going through a lot of changes, especially after the introduction of the giant Uber. But how much impact Uber has done to Addison Lee? Of course low prices will suck costumers from one place to the other but the likes of Ryanair and EasyJet didn’t drive British Airways out of business. In fact, for Addison Lee, the impact of Uber has not been, in my view, as big as it has been for blackCabs and other minicab companies, as they share a similar type of customers and use a similar pricing system. BlackCabs and Uber for instance, use a variable pricing system (meter), and Addison Lee use a fixed pricing system. For Addison Lee customers, the route taken to the destination is irrelevant as the price will not change. Avoit traffic is more important for them. For BlackCabs and Uber customers, a drive around the M25 to avoid the central London traffic can see the price surge many times over. So Addison Lee and Uber are more like British Airways and Ryanair. Prices might be different but we cannot possibly compare the quality and the professionalism offered by Addison Lee with those offered by Uber. It would be like comparing British Airways to Ryanair. It just doesn’t make any sense. Some people shop in ASDA and some others shop at Harrods. Some people fly British Airways, some others fly Ryanair. These companies survive because they have their own type of customers. The competition between the two only occur within a small percentage of the market. In London, there is no competition on the same level of Addison Lee. Over all, Addison Lee is the best MiniCab company in town and will continue to be as long as they continue to provide top quality service and don’t starve their drivers from a decent living wage. But is this what Addison Lee is planning for the future?
Addison Lee has obviously, lost a lot of ASAP jobs including CASH and Credit Card jobs, but hold on a minute, Addison Lee is still the best Minicab company in the UK with the best drivers, the best fleet, the best safety record and services. Moreover, Addison Lee supply some of the biggest and most important accounts in London with thousands of pre-booked jobs done every day. Addison Lee is also the most trustworthy company in London and is certainly the number one choice for Londoners, specially for women looking to go home after a night out. So who would you rather fly with, Ryanair or British Airways? Who would you rather travel with, Addison Lee or Uber? Of course, if you can choose, most of us would definitely go for BA and AL, because we know who has the best service and the best reputation, and people trust them. British Airways customers don’t fly Ryanair unless they have to. Just like Addison Lee costumers don’t use Uber unless they have to. So what could be behind the new pricing policy introduced by the new company owners in 2015? Why has these changes caused such mayhem for Addison Lee driver’s earnings? What is Carlyle’s plan for the future of Addison Lee? Could it be an incredible strategy mistake?
Although Addison Lee management claims Uber factor is behind the changes, nobody at Addison Lee has so far, been able to explain why the changes was only introduced in May 2015, three years after Uber started operations in the UK. But coincidently, the changes have been introduced just after the former owners of Addison Lee left the company and management in the hands of the new owners, the Carlyle Group, an American Hedge Fund with not the best reputation in treating their employees and known to have some of the most aggressive strategies to keep growing their profits. Therefore, the changes and charges being imposed on drivers may have been more to do with a change of management strategies than the changes in the market itself. But, the question stands, what’s next for Addison Lee drivers? They are working much harder for much less and they are completely blind about the future of the company. Is Carlyle squeezing the life of Addison Lee to sell it for scratch later on? As drivers leave the company in numbers never seen before, those who decided to stay a bit longer are starting to ask, is this the end for one of the best MiniCab companies in the UK? Discontent between the driver has never been so high, and despite many attempts to bring Addison Lee to negotiation, the company has either ignored or refused to make any compromises to the drivers’ demands. Those who haven’t left yet are considering actions against the company until both parts can resolve the dispute over deep cuts in payment rates and unfair charges.
Surely, there was no mistakes made by Addison Lee management when they decided to give their customers up to 30% discount and make their drivers pay the full costs of it. From the financial point of view its perfect. You transfer all the costs to your drivers and keep all the profits. It makes sense, but it is monstrous and imoral! How about Addison Lee’s corporate social responsibilities? These costs, adding to 20% commission fee charged by Addison Lee in all Credit Card and cash jobs, amounts to an incredible 50% charge from drivers earnings, but that’s not all. After that inicial 50% charge, Addison Lee drivers still have to pay for insurance, car rent, tax and fuel. Under such pressure, Addison Lee drivers have been forced to work over 15 hours a day for in many cases, just breakeven. Many other drivers are working 7 days a week with no time for family or leisure. It’s a very unfair situation comparing to what drivers use to have just a year ago. Addison Lee went too far to quickly on the cuts and was left with no leverage for future possible changes in the market. The market may have changed, but in no way it changed to justify the incredible cuts in earnings that Addison Lee drivers have been experiencing in the past year or so.
The same way we will not see British Airways dropping their prices down to compete with Ryanair, or M&S dropping their prices down to compete with ASDA, it seems that Addison Lee has no reason to reduce their prices, in many cases below Uber’s, to compete with companies which don’t really share the same type of customers and level of quality offered by Addison Lee. Even less, Addison Lee should never charge their drivers for the discount they may give to their customers. It should be the company’s responsibilities to fund any discount and sales promotion.What Addison Lee has really going through right now is a severe and very aggressive change on the way the company make its profits. The cuts and charges imposed by Addison Lee on their drivers went far beyond the line of survival and is utterly unacceptable. It is vital that Addison Lee understands and recognises quickly, that the hard work of their drivers is their only source of revenue and without drivers the company would not survive. Therefore, its paramount that a fair payment deal for drivers should be guaranteed and protected by Addison Lee so the future of the company and the livelihood of their drivers can be secured.