For those who follow me on Facebook, you may already know that I recently spent a week in Ireland with my wife. But in-between all the site seeing and Guinness drinking, I made a concerted effort to take Uber as much as possible and talk to as many drivers as I could.
Dublin is a very walk-able city but there are actually somewhere around 15,000 licensed taxi drivers (that’s more than in New York, a city with 7-8x the population). And unlike the US, almost all of these drivers are independent owners and operators of their vehicles. So they already enjoy much of the flexibility that we all value here in the States with Uber.
In Dublin, Uber is mainly used by Americans and other European tourists. Many of the local Irish residents actually use a different app, called Hailo, that is immensely popular in Europe right now. Hailo is a smartphone ride-hailing app that works exactly like the Uber passenger app but for taxis. Nearly all of Dublin’s taxi drivers now use Hailo and like Uber, they are only charged if they get a fare request. There are also no weekly or monthly minimums like with traditional taxi services.
I’d estimate that Uber’s market share in Dublin is similar to Lyft’s market share in America. While I was in Dublin, there was usually an Uber car available within 5-10 mins but when I cross-checked with Hailo, there were always 3-4 cabs within just 1-3 minutes of my location in the downtown area (kind of like how it is here in the US with Uber and Lyft). The delta was especially pronounced in the suburbs.
Taxi drivers in Dublin actually have a few different ways they can get their ride requests:
- Taxi Lines: This is essentially a queue in popular areas where drivers line up and passengers get into the cab at the front of the line.
- Hailo: Hailo is a free smartphone app that is very popular with European passengers. Drivers can receive requests on the app just like with Uber.
- Street-hails: Taxi drivers in Ireland are allowed to accept street-hails almost everywhere. And since taxis are so ubiquitous, it is often most convenient for passengers to get a cab this way.
- Uber: Uber is one of the least popular options in Dublin right now but since it doesn’t cost drivers anything, more and more drivers are signing up. Most of Uber’s passengers in Dublin are foreigners since they are so accustomed to taking Uber in their home countries.
- Radio Company: Radio companies have definitely seen a huge hit to their market share over the past few years. But now that most drivers are on Hailo and even Uber, some drivers are leveraging radio companies again. There’s not a lot of demand but there also isn’t a lot of supply. Most of these companies charge a flat weekly or monthly fee so the drivers I talked to said it’s important to keep a log of your rides to make sure it’s worth it.
History Of Uber and Ireland
UberX in Dublin actually works very different than UberX in America. Ireland’s regulatory authorities only allow for licensed drivers to transport passengers so there are no every day people like you and I driving people around. So whenever you call an UberX in Ireland, you’ll actually get a taxi driver.
Uber broke into Dublin in April of 2014 and initially their prices were 20-30% lower than that of a taxi. They tried going the ‘innovate first, regulate later’ route and signing up private citizens, but the Irish government quickly put a halt to that.
And since they couldn’t get any private citizens signed up, none of the taxi drivers would work for Uber. In fact, this has been pretty common with Uber across Europe. The taxi unions are much stronger abroad (holding massive strikes against Uber) and Uber really hasn’t taken off the same way it has in America.
(It wasn’t until Uber lowered their discount to 10% and a 2% commission did it start catching on with taxi drivers in Ireland.)
The reason for this is that Hailo (the European taxi-hailing app) actually launched in Dublin 2 years ago, charging a 12% commission and since then it has gained massive popularity. Like Uber, you can call for a ride with an app, pay by credit card and even select Hailo+ or HailoBlack. Unlike Uber though, they allow you to enter a pre-set tip option (even though tipping in Europe is much less prevalent) and you can pre-book rides.
One of the reasons why Uber has been so successful in America is because they did a great job at everything that taxis did poorly: calling for a ride, paying with credit card, rating your driver, etc. In Dublin (and Europe) though, Hailo is already doing all of that and more so Uber has no competitive advantage in that respect.
I still think Uber could eventually challenge for a much bigger piece of the pie for two reasons though. The first is that they have a huge presence in the US and a growing worldwide brand. Most of their existing customers aren’t going to go out of their way to download another app (Hailo) when they go to other countries.
The second and more compelling reason though would be if they start using non-professional drivers similar to what they do in the US. Right now, only true taxi drivers in Ireland can take UberX calls and of course they are never going to be willing to take a voluntary 20-30% pay cut when they have other options like Hailo, street-hails and taxi lines.
But if Uber can figure out a way to get non-professional drivers on the road and lower the price by 20-30%, that will be a game-changer. This is really Uber’s only play too since in order to achieve the rapid growth that they want, they can’t wait around for people to slowly adopt to Uber.
As it stands now, UberX rides in Dublin are 10% cheaper than the cost of a regular taxi. Taxi drivers eat the 10% discount and also pay Uber 2% of each fare. Obviously a 2% cut for Uber is not sustainable but this falls right in line with their general strategy of offering steep discounts up front and then slowly raising their cut as time goes on.
Here’s an analysis of one of my Uber rides:
I went 6.83 kilometers (4.24 miles) and it took 16.5 minutes. With a regular Irish taxi, it would have cost me 20 Euros but since I got a 10% discount with Uber, it was only 18 Euros. The driver ended up with 17.60 Euros ($19.96) after the 2% commission to Uber. Not bad for about 20 minutes worth of work. Remember, these taxi drivers in Dublin are independent owner/operators of their vehicles so all of that money goes into their pocket.
If we compare that to Uber fares in Los Angeles for example, that same ride would have cost me $7.79 as a passenger and the driver would have only received $5.43! Prices and the cost of living are a bit higher in Europe but not over 350%! So either drivers here are severely underpaid or drivers there are severely overpaid. I’ll let you guys decide.
While in Dublin, I actually grabbed a couple taxis from taxi queues and off the street because it was just so much more convenient. 10% off a 10 Euro ride wasn’t really enough incentive for me to call for an Uber and wait for them to come pick me up when there were plenty of taxis just sitting there.
I only visited one European country and took Uber in one city but I learned a lot about the challenges Uber is going to be facing with worldwide expansion. In fact, the legal and regulatory issues it’s been facing in America are a pittance to what they will face worldwide. Many of the countries Uber is trying to break into are much slower to innovate than the US and the brute-force tactics that Uber has had so much success with domestically will not work as well abroad.
I do think Uber’s name and reputation will help expansion efforts. But they won’t be able to compete with traditional taxis/Hailo using taxi drivers. Eventually, they’re going to need to shift towards unlicensed every day drivers who are willing to work for less. And that’s when things are really going to get messy.
Readers, what do you think about Uber’s worldwide expansion plans? Do you think the American UberX model will translate to places like Europe?
Make Every Mile CountDid you know that every 1,000 business miles can generate $535 in tax deductions? Never miss another mile with the new QuickBooks Self-Employed automatic mileage tracker.
-Harry @ RSG
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