Addison Lee's CEO told us how Uber is hurting his business and what he's doing about it
For years, the London taxi market was simple: the famous black Hackney cabs were allowed to do street-hail, curbside pickups. And Addison Lee - and an endless number of microscopic local competitors - did the private hires. AL's fleet of 4,800 cars dominated the phone-call booking trade. The company even introduced Britain's first ever ride-booking app, which still accounts for 60% of AL's business.
Then Uber launched in London two years ago, and Addison Lee's world got a lot more complicated:
- AL and the black cabs failed in their bid to persuade Transport for London to regulate Uber cars as if they were taxis.
- Carlyle, the private equity group that owns AL, reportedly put on hold an £800 million ($1.2 billion) plan to sell the company.
- The company laid off 90 people in a restructuring this year. It currently has about 650 employees.
But it's not all bad news, CEO Liam Griffin tells Business Insider.
In a lengthy talk recently, he told us that AL is still growing revenues by 7% a year (the company currently takes revenues of about £232 million from £320 million in transactions across its cars). Profits are up. And AL has a plausible plan to lock in the higher-priced, corporate section of the market that isn't yet penetrated by Uber. AL will install free wifi service in all its cars over the next few weeks, the kind of perk that business riders prefer. Uber cannot promise that.
Griffin also has an audacious plan to enter the New York City market - which is even more competitive, and even more disrupted by Uber, than London's.
But first, the context. How bad has Uber hit AL?
"It would be wrong to say Uber is having no impact because it is," Griffin says. "Uber has definitely been disruptive."
Uber appears to be peeling off the under-35s, he says, and the casual part-time drivers who want to serve them. That's not a lethal problem for AL, because the company wants to lock in its older, more expensive, corporate account business with professional drivers who work five days a week. That's where free wifi comes in. Some execs just need it on the ride, and they cannot get that from Uber. Plus, corporate customers prefer the level of courtesy, cleanliness and deference that AL drivers are supposed to offer.
"It's about quality of service, we're not competing with the back-street booking services, the yellow flashing light brigade, as we call them." (That's a reference to the lights small taxi companies often have in their office windows to attract late-night customers.) "You can charge a premium. How much of a premium is open to debate." It's like British Airways and Ryanair, he says. "They've both got airplanes with seats on but somehow BA always manages to charge more."
If AL is still growing, why were their layoffs? "We have always refined the employee base. We've added a lot of tech over the years," he says.
This meant fewer staff were needed to answer phones in the control room, which had traditionally been a manual process. Much of that booking is now automated and AL has reduced booking time by 25% as a result, he says. And the company is launching a new version of its app in the next few weeks.
That's where the seemingly bonkers plan to launch in New York City comes in.
AL is not actually going to compete with a fleet of cars in Manhattan, it turns out. Instead, AL will license its ride booking dashboard to American private hire companies, which want to cut costs and speed up bookings the way AL did. Suddenly, the New York plan makes a lot more sense: AL will take a cut of the revenue.
Before Griffin ended our conversation, I asked him about our favourite rumour: AL is allegedly the chosen cab company of certain members of the Royal Family when they're travelling incognito around London. Turns out that is probably not happening, Griffin says. The company does have the Royal Warrant, which is the seal that allows merchants to say they supply the Royal family with goods or services. But "it's more the staff at Buckingham Palace" rather than actual royals, he says.