Taxi Apps: Changing the World While New York Waits

Allan Baxter | Photodisc | Getty Images

A wave and a bark as traffic roars by, the cabbie doesn't see you and you're left standing in the rain, splashed by a puddle. It's pretty much a rite of passage of city living.

But a lot of people want to make getting a lift a lot more civilized—by making the summoning and payment as simple as a couple taps on your smartphone.

It's happening around the world, though in some places—namely, New York City, where taxis are a $2.5 billion business—there's old-guard resistance. What's clear is that cab hailing as we know it may fast be going the way of the corner phone booth.

Not everyone's happy about the e-hail phenomenon.

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The New York Black Car Assistance Corp.—representing some 6,000 for-hire drivers, who are summoned by phone—sued after the NYC Taxi and Limousine Commission approved an e-hailing pilot program. Last month, Manhattan Supreme Court Justice Carol E. Huff shut down the program before it could launch so she could weigh the issue, and her office had no comment this week on whether any decision may be forthcoming.

(Update: On April 23, 2013, Justice Huff dismissed the lawsuit, allowing the pilot program to proceed.)

The black-car service guys, who are not allowed to accept street hails, apparently fear they'll lose fares to people ordering taxis on their smartphones. Their position is that the "e-hail" is a misnomer. "This is not an e-hail app, this is an e-dispatch app," said spokesman Bill Farrell. "The car is dispatched to you when you use the app."

But Jay Bregman, CEO of Hailo, one of the more formidable players vying for a slice of the Big Apple, said it's an urban myth that only black cars can pick up prearranged rides. If black-car service rides can take advantage of app-enabled fares—they can and do; one popular app is Uber—why can't yellow cabs, he asks?

The official city website states plainly: "Only For Hire Vehicles (such as black cars) may have a pre-arranged agreement with clients." Does a tap on a smartphone amount to a "pre-arranged agreement"? That's the gray area that Judge Huff is presumably studying.

Hailo originated in London in November 2011 and is currently in 10 cities from Toronto to Tokyo. Bregman said the company has some $51 million in venture capital and partners such as Richard Branson, KDDI, and Union Square Ventures.

Bregman said 30,000 drivers use the app worldwide, and 5,000 New York cabbies are already using it, even before the launch of e-hailing, because it can be used as a kind of social network for sharing information about traffic jams or lines at a taxi stand. As for demand, "tens of thousands" of New Yorkers, he said, have downloaded the app—more than the company has customers in some cities where it is fully up and running.

"We understand it's highly charged and litigation is common in New York," Bregman said. "But this is the first place we've faced obstacles of this kind."

In any case, he added, the advent of e-hailing is "clearly an inevitability."

Another would-be participant of New York's pilot program—the TLC said there were four, but declined to name them—is Taxi Magic. Marketing Director Matt Carrington claimed it is the largest mobile app player in the U.S., with perhaps 90,000 drivers nationwide.

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Flywheel is another, operating in Washington, Miami, Cleveland, Oklahoma City, San Diego, and San Francisco. "It's New York," said CEO Steve Humphreys of the current blockage of businesses like his. "They're gonna do what they need to do. But it's exploding everywhere in the world. New York is a great global city. It's gonna happen."

Each of these e-hail apps is designed to function pretty much the same, at least from the consumer's point of view: Open the app, "hail" the cab, watch it approach from the comfort of your home or barstool, jump in when it arrives, and pay through the app, as well. Bonus feature: A record of your ride (car and driver) on your device, in case you lose something, for example.

The cost? No one wanted to say for as-yet unlaunched services, but $1 to $2—out of your pocket, not the driver's—seems likely. "What you'd tip a doorman for hailing you a cab," Bregman said.

Alternative Rides

Others are taking more creative approaches.

Shairporter came from a simple idea: A lot of the people at the airports are headed to the same neighborhoods, so why not share those rides?

Founder Winston Wu said he's partnered with black-car service companies and gets 10 percent to 15 percent of the fares his business arranges. Launched in November, Shairporter got 12,000 unique visitors in the first two months.

So far, it takes some forethought: Ride-sharing arrangements need to be made in advance. However, Wu hopes to make it possible soon to hook up passengers at the terminal in real time.

A more radical idea is SideCar, which just launched in Brooklyn on March 15. It takes black cars, taxis, and the city out of the picture entirely. The app matches passengers for drivers who are going the same way. There's no fee, only a "donation," of which the app claims 20 percent.

Some may question the safety—it sounds a lot like e-hitchhiking. After all, Hailo's Bregman emphasizes that his service uses only licensed taxi drivers. But SideCar spokesperson Margaret Ryan said all drivers undergo screenings and criminal background checks before they are allowed to join the program.

The company, which has been in San Francisco since last June and has added six new cities in 2013, says it has matched more than 100,000 rides so far. If it catches on in a big way, SideCar could cause a bigger disruption to city cabs and black-car services alike than e-hailing ever could.

But these innovators might heed the tale of Fare/Share, which launched in 2010 to some fanfare—press coverage and a spot at the prestigious "TechCrunch Disrupt" conference.

The model was to pair passengers with the same general destination so they could split cab fare. But co-founder Jeff Novich found that people don't often turn out to really want what they say they want.

"Many New Yorkers will say they want to share a cab, but a cab is often perceived as a luxury," he said. "People overwhelmingly want it now, and want to be alone."

That app is out of business.

Follow @Matt_Twomey on Twitter.