London has extensive public transport options, from roads to rivers to rail. However, the taxi market is still thriving, especially in West London. Taxis offer customers comfort and convenience during their commute or leisurely travel in the country’s capital.
With rising competition from technology-centred taxi companies, black cabs and private hire taxi businesses can make smart investments in payment solutions and focus on providing excellent customer service to help them stand out, build a good reputation and grow organically through recommendations in order to expand their service.
Black cab vs private hire – what’s the difference?
When starting a taxi business, it’s useful to understand the difference between black cabs and private hire taxis:
Black cabs
Black cabs, also known as hackney carriages, are a historic transport service, with the name hackney carriage coming from horse-drawn carriages made in Hackney.
Licensed black cabs can be flagged down on the street or hired from a taxi rank, although you can now pre-book black taxis online.
Although an iconic symbol of London transport, black cabs can be found in various cities in the UK. Black cabs are licensed by the local authority or the Department of the Environment.
In London, this means that black cabs are governed by the Taxi and Private Hire Office, part of Transport for London (TFL).
Private hire taxis
The biggest difference between black cabs and private hire taxis, also known as ‘minicabs’, is that private hire taxis are legally not allowed to pick up passengers from the street.
Instead, they must be pre-booked by phone, website, app or in person at a taxi office. This means the customer would be picked up at a pre-determined location and delivered to their destination.
How many taxis are there in London?
When considering growing your taxi business, it’s important to consider how many black cabs there are in London with which to compete.
In 2023, there were 89,600 Private Hire Vehicles, or PHVs licensed in London, compared to 15,100 black cabs. Although there is a decline in black cabs, the overall taxi industry in London is highly competitive.
How to become a taxi driver in London
To start and grow a successful taxi business in London, you will need to have the right licensing.
Unsurprisingly, you will need a valid and in-date driver’s license. However, there are other additional licenses you need to obtain, depending on whether you want to be a black cab or private hire taxi driver.
For a black cab driver, you need to be over 21 years old and have a TfL driver’s licence.
To become a private hire taxi driver, you will need one of two driver’s licences:
- A small operator’s licence allows up to two vehicles to be used for private hire bookings.
- A standard operator’s licence – no limit on vehicle number.
Once you have your license, you will also need to consider the many other requirements to become a taxi driver in London. These include:
- Medical certificate to prove you’re healthy and physically capable of driving.
- High-quality communication skills and a good grasp of the English language.
- A Disclosure and Barring Service (DBS) check to see if you have any previous convictions or cautions that would prevent you from working safely with the public.
- If you want to be a licensed black cab driver in London, you must study and pass the ‘Knowledge’ test.
London Taxi Knowledge Test
Another thing that sets black cab drivers apart from private hire taxis is that they must take ‘The Knowledge’ test.
The ‘Knowledge of London’ requires drivers to memorise the streets, best routes and key landmarks within a six-mile radius of Charing Cross.
Whether customers are looking to go to the best restaurant in West London, want to take a taxi to the West End to see the latest hit theatre production, or take a landmark taxi tour of London, The Knowledge allows black cab drivers to take the quickest route without relying on way-finding services.
This London taxi knowledge can often set black cabs apart from other taxi services that rely only on Sat Nav systems and have little local knowledge to help them avoid traffic, take a more scenic route or react to customer requests or changes.
With the various other costs associated with becoming a taxi driver, such as a license, DBS check and a medical examination certificate, combined with purchasing a suitable vehicle and insuring it, starting up your taxi business can be expensive.
Therefore, it’s important to make sure you prioritise profitability when it comes to running and growing your taxi business in London.
How to increase profitability for your private taxi business
Consider investing in an electric or hybrid vehicle
To meet the requirements of the Ultra Low Emission Zone (ULEZ) in central London, there has been an increase in zero emission capable PHVs, including electric taxis which make up 57% of the London taxi fleet
So, investing in a fully electric or hybrid car will help you to not only reduce your emissions, it can also increase your profits by avoiding ULEZ and London Congestion Charges.
Smart payment systems for taxi drivers
Traditionally, taxi drivers relied exclusively on cash payments for their services. Carrying physical cash has declined, so passengers would have to ask a driver to stop at a nearby ATM to withdraw cash in order to pay for their ride, often resulting in detours, additional wait time and costs associated with making an additional stop.
Whether you operate a private taxi or a black cab, it’s worth looking into the best card reader for taxi drivers to help simplify your payments and offer convenient and flexible payment options for your passengers.
This not only ensures you get paid, but offering a better customer experience will help your reputation through positive reviews and increase tips potential – resulting in a more profitable taxi business.
Develop your online website or app for your taxi business
To compete with other contemporary taxi companies, like Uber or Lyft, it could be beneficial to invest in app development for your taxi business.
This will enable customers and potential customers to easily book private hire taxis in advance or get an approximate cost quote for a journey, which can help you to increase your visibility and land more business.
Alternatively, making some user-experience focused upgrades to your taxi business website could also help you to stand out amongst your competitors.
Having an easy-to-use website or app can also decrease the number of staff members needed to answer phones or work in a physical cab office, leading to more efficient operations and increased profitability.
Provide friendly customer service and collect reviews
One of the best ways to grow your business is by collecting reviews for your business online. People are more likely to trust a brand if they have good reviews online on platforms such as Google or Trustpilot.
Start by setting up a Google Business Profile or similar account on a reliable reviews website. Then, ask riders to leave you a review. To encourage more reviews, try having signage in your taxi that reminds customers to review their ride, and how to do so.
Even better, have QR codes in your taxi that take them directly to the reviews platform. Alternatively, print business cards with details of review sites that you can pass to customers alongside their receipt.
Increasingly, customers rely on social proof, especially when it comes to competitive services such as taxi companies. So, having a high rating online can really help to grow your taxi business, without any additional investment in marketing activity.
Final Thoughts
With rife competition, the best way to stand out is by making smart business decisions that are profitable and passanger-focused.
By giving your customers a convenient online booking system and card payment options, providing excellent customer service and investing in energy-efficient vehicles, you can keep costs down and your profits up.
