A war is raging in the Israeli taxi market, as a new smartphone application for ordering cabs has revolutionized the industry. Representatives of some 50 cab companies with 4,000 drivers met this week and decided to develop a joint application to fight back.
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Taxi drivers and customers alike are leaving traditional cab firms to switch to the Get Taxi service, according to the company and its rivals.
Get Taxi launched its app in Tel Aviv in April 2011, which allows anyone with a smartphone to order a cab without calling a taxi firm. The application finds the nearest cab and, if the driver is free, Get Taxi directs the cab to the customer, while the customer can track the approaching cab on a map on their phone. Customers can also order cabs through Get Taxi's website.
Get Taxi has quickly become the second-largest cab company in the Tel Aviv area, and one of the largest in the country. But the traditional taxi companies are not taking it lying down.
Yehuda Bar-Or, chairman of the Taxi Drivers Association, estimates that between 15% to 30% of all cabs in the Tel Aviv area are ordered via smartphones, depending on the time of day. At night, more people use apps. But everyone realizes that this is just the beginning of a major change, he said.
Get Taxi drivers pay the company about NIS 350 a month for using the service, compared to NIS 800 to NIS 1,200 a month for traditional cab companies. As a result more and more taxi drivers are switching allegiance, and the Taxi Drivers Association has declared war in response.
"The company doesn't even have a license to run a taxi stand ... They come and invest money and destroy the living of honest people. It's unfair," said Bar-Or.
The association asked the Transportation Ministry to impose regulations on Get Taxi, saying the new competitor must meet all the standards of a cab company, including the licensing requirements.
But the ministry said: "There is no requirement to organize [a cab stand] for such cabs, and therefore there is no need for a license."
Last week Get Taxi raised $20 million, on top of $30 million it has already raised. The company said the $20 million is intended to help finance the company's entry into New York and other U.S. markets, as well as strengthening its presence in Israel, London and Moscow. Investors in this latest round, the third since the company was formed, include Access Industries - the investment arm of Len Blavatnik, and Get Taxi's founders and joint CEOs, Shahar Waiser and Roy Mor.
"They have changed the rules of the game. After 50 years of working in a certain way, everyone is chasing after them," said Eli Fleishman of the New York Taxis company in Tel Aviv. "We have developed a competing application, but with a budget of NIS 60,000, and they have millions. I pay for an office, advertising and employees. They have more money and half the expenses. They can destroy the entire business and then become a monopoly," said Fleishman.
New York Taxis' competing app allows customers to order a cab from a smartphone, but the taxi must be dispatched in the regular way and the customer cannot track its progress.
"We are 100% legitimate, and [meet] all the regulations," said Nimrod May, Get Taxi's deputy CEO for marketing.
The Get Taxi network includes hundreds of thousands of customers and more than 2,000 drivers in 15 cities - 13 in Israel, plus London and Moscow. May said most of the drivers enrolled in the network have left the taxi firms they were previously working for in order to drive as independents receiving orders through Get Taxi.
The service was inaugurated in Moscow in March, and May said the number of users has doubled each month since. A cab is "hailed" over the system once every 10 seconds at peak hours, he said.
When a customer orders a cab through Get Taxi he is told the name of the driver and other vehicle information. They can rank drivers, view previous ride details and earn points toward free rides and other benefits. The system operates on iPhone, Android and Blackberry platforms.
"We are a company that's bringing change to an industry that hasn't witnessed much change since the days when you could first order a taxi by phone, and to offer a new experience," May said.
"The idea is that we offer a significant improvement for drivers, private passengers and business passengers," he added. The vision is for Get Taxi to replace private vehicles, since passengers can order a cab anywhere and pay with a credit card or other electronic payment system, May said.