the knowledge
After the crisis, the real work begins
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repairs and parts cost more and earning HERE APPEARS TO BE AN AIR OF aspirations are growing as shopping and hope and optimism that the worst of fuel costs rise. Add into this the need to the Covid-19 pandemic has passed, migrate to electric cars and fund whatever and life in this industry may start to additional requirements local councils ebb toward normality. decide are necessary to comply with the new Whether this is wishful thinking, hope over statutory guidance and there you have a quick experience or reality we will no doubt discover. demonstration of why fares will not only have to One thing is certain - there will eventually be a turning point, and when it comes, the real work Dr Michael Galvin rise now but continue rising for some time. The ‘skill’ of being able to reduce prices begins. https://mobility and compete against venture capital-funded The fog and chaos of Covid has shielded much serviceslimited operators, some of whom have subsidised fares and tested many but it has also hidden problems .com by up to 60%, is not much use now. The here and and put many things in abeyance. As the fog now and foreseeable future will require the skill and the chaos drift away, those things that the of moving prices steadily up to address the supply situation, industry struggled with before Covid will come off the back and in all likelihood to burn off some demand. burner and be at the forefront of everyone’s thoughts and The new situation will require drivers to earn much more actions. in order for operators to compete with the competition for The industry collectively entered this period already their services – for example, deliveries. It will also require unsure, challenged and frustrated. During the Covid period customers to pay much more if they want a service. The some have thrived, some have sunk without trace and others recent madness of the past seven years or so, where prices have survived. The skills needed, and if we are honest have reduced from an already low base, is firmly over. acquired and deployed very quickly during the Covid period, Operators will need to continue to monitor and control won’t be the same skills that will be required to strategise costs effectively as I believe this will be a smaller industry so and build a profitable and successful future. therefore there will be less opportunity to generate revenue Happily, costs will be lower as everyone has had to take based on increasing volume. This situation, with all its tough decisions which will set companies up to cope with downsides and risks, and the new skills and propositions volumes which without much doubt will be lower. Cash will needed to retain and gain market share, will be a great have been eaten up or exhausted, cars will need replacing leveller. and staff will want more money. So old problems and It was starting to become obvious before Covid that the challenges will mix with new. lack of a path to profitability among the more proliferate of The oft-claimed driver shortage appears to me to be the new entrants was stressing their ‘investors’. A gentle nothing of the sort – instead I would suggest it is simply move up in interest rates will reduce high wealth individuals’ an economic issue. Supply has unsurprisingly diminished appetite for risk and VC money may be harder to find. through a mixture of Brexit and not being able to earn a No one will be immune from having to charge more to living as a taxi or private hire driver, and other work has customers and pay more to drivers and if, like some, the only been found. Fares are relatively low and in some cases at tool in your bag is low fares… well, the future is looking historically low levels. somewhat difficult! Demand has yet to be seen. During brief forays over recent This industry is never boring and this phase of our months into a near-normal state, it did appear that demand collective careers will prove no different. As always, action has been stellar and quickly outstripped supply leading to will be more important than hope. After the energy and the claims of a driver shortage. focus expended by everyone who has Simple economics dictates that survived or thrived during the last when demand is relatively high and “If, like some, two years it would be a shame to relax supply is relatively low prices rise now and simply hope that somehow to burn off some demand and to the only tool in business will get back to what it stimulate additional supply. We are was and that drivers will magically in that situation. Fares across the your bag is low fares… migrate back to taxi and private hire. industry are on average much too low well, the future is The work begins now. and have been for a long time. We are in an inflationary situation, looking somewhat fuel is at breathtaking prices; n www.mobilityservices secondhand cars are costing more; limited.com difficult!...”
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FEBRUARY 2022
