Could Lyft Be Coming to London?
Uber's biggest American rival could be considering a move into London after it emerged that Lyft executives have held a series of discussions with Transport for London. The revelation comes at an extraordinary moment for the capital's private hire industry, just days after TfL announced that Uber would not be granted a new London operator licence.
London's rapidly changing private hire market could soon attract another major American technology company.
Lyft, the ride-hailing business that has emerged as Uber's principal competitor in the United States, has held a series of meetings and conversations with officials responsible for London's transport network.
The discussions have immediately fuelled speculation that Lyft could be considering London as one of its first major markets outside North America.
Nothing has yet been confirmed.
Lyft has not announced a London launch and has declined to provide details about when or where its international expansion will begin.
Nevertheless, the timing is remarkable.
Only three days ago, Transport for London announced that it would not renew Uber London's private hire operator licence when its current licence expires at the end of September.
Suddenly, London's enormous private hire market appears considerably more open to competition.
The discussions between Lyft and Transport for London didn't begin after Uber's licence decision.
They had already been taking place for months.
Records show that Lyft executives have been speaking with TfL officials about the company's business model and wider strategy.
Among those representing Lyft were senior executives Raj Kapoor, the company's Chief Strategy Officer, and Michael Masserman, its Director of International Government Relations.
A meeting involving TfL and Lyft representatives took place in London in late 2016.
Further conversations followed.
Then, on 6 March 2017, TfL's Director of Transport Innovation, Michael Hurwitz, met Kapoor and Masserman during a business trip to New York.
Lyft provided TfL with an update on its business strategy.
Another telephone conversation between Hurwitz and Masserman took place on 8 August 2017, covering Lyft's wider business strategy.
No.
Meetings with Transport for London shouldn't automatically be interpreted as confirmation of a launch.
TfL speaks with transport and technology businesses from around the world as part of its work examining new forms of mobility.
Michael Hurwitz explained that TfL regularly talks with companies internationally about innovations that could potentially improve transportation in London.
But Lyft's discussions are nevertheless significant.
The company has already made clear that international expansion is on its agenda.
Lyft chief executive Logan Green said in August that the company planned to expand internationally in the “not too distant future.”
London would be an obvious prize.
British passengers could be forgiven for asking that question.
In the United States, Lyft is already one of the biggest names in app-based passenger transport.
The company was founded in 2012 and has expanded rapidly across American cities.
Its basic proposition will sound extremely familiar to anyone who has used Uber.
Passengers download an app.
They enter their destination.
A nearby driver accepts the journey.
The app provides information about the vehicle and driver.
Payment is handled electronically.
The passenger can subsequently rate the journey.
In other words, Lyft competes directly with Uber for many of the same passengers and drivers.
Uber remains much larger internationally, but Lyft has established itself as its most important competitor in the United States.
By September 2017, Lyft says its services cover hundreds of American cities and reach the vast majority of the US population.
It also has considerable financial backing.
The company has raised billions of dollars from investors, including investment from General Motors.
That financial strength matters.
Launching a private hire platform in London would require substantial investment.
Drivers need to be recruited.
Passengers need to be persuaded to download another app.
Marketing can be expensive.
Regulatory requirements need to be satisfied.
A smaller start-up might struggle.
Lyft has considerably greater resources.
Why would Lyft be interested in London?
Scale.
London is one of the world's largest markets for taxis and private hire vehicles.
Millions of residents need transportation every day.
Then there are international tourists, business travellers and the enormous passenger volumes generated by London's airports.
The city also has a population comfortable using smartphone-based transport services.
Uber has already demonstrated the size of that market.
At the time of TfL's decision, Uber had around 40,000 drivers and approximately 3.5 million users in London.
Those figures would attract the attention of almost any competing transport platform.
Lyft's discussions with TfL might have attracted relatively little attention under normal circumstances.
These are not normal circumstances.
On Friday, 22 September 2017, Transport for London announced that Uber London Limited would not receive another private hire operator licence when its existing licence expires on 30 September.
TfL concluded that Uber was not “fit and proper” to hold the licence.
The regulator raised concerns involving Uber's approach to reporting serious criminal offences, medical certificates, Enhanced Disclosure and Barring Service checks and its explanation of the use of Greyball software in London.
The decision immediately created uncertainty for one of London's biggest private hire operators.
There is an important point for passengers.
Uber vehicles will not simply disappear from London when the current licence expires.
The Private Hire Vehicles (London) Act 1998 gives Uber the right to appeal TfL's decision.
The company has 21 days to begin that process.
Most importantly, Uber is allowed to continue operating while the appeal process is under way.
That means London isn't suddenly about to have millions of passengers searching for an alternative overnight.
Nevertheless, the uncertainty surrounding Uber creates an obvious opportunity for competitors.
If Lyft eventually enters London, the significance would extend beyond the arrival of another private hire app.
It would potentially bring the rivalry between America's two largest ride-hailing companies directly onto London's streets.
Until now, Uber hasn't had to compete with Lyft in Europe.
London could change that.
The two companies could find themselves competing for exactly the same resources: passengers, drivers, corporate accounts, airport journeys, and market share.
That competition could have consequences for prices and driver incentives.
Lyft cannot simply switch on its app in Britain and begin carrying passengers.
London's private hire industry is regulated.
A company accepting private hire bookings needs the appropriate operator licence from Transport for London.
The drivers also need the appropriate licences.
Vehicles have to satisfy private hire licensing requirements.
That distinction is particularly relevant this week.
Uber's difficulties demonstrate that possessing sophisticated technology and millions of customers doesn't remove the requirement to comply with London's licensing system.
Lyft would have to satisfy the same regulator.
Reports about Uber and Lyft frequently describe them as taxi companies.
Legally, London's system is more complicated.
A London taxi, normally referred to as a black cab, can be hailed directly from the street or taken from an authorised taxi rank.
A private hire vehicle cannot operate in the same way.
Private hire journeys must be pre-booked through a licensed private hire operator.
An app is simply one method of making that booking.
A website or telephone booking performs a similar function.
Lyft would therefore enter London as part of the private hire market rather than becoming another fleet of London taxis.
The technology may sound ordinary today, but smartphone booking has transformed passenger expectations remarkably quickly.
Not long ago, booking a minicab generally meant calling a local office.
The controller took the passenger's details.
A driver was allocated.
The passenger waited without necessarily knowing exactly where the vehicle was.
Smartphones changed that relationship.
Passengers can now expect to see: the driver's location, estimated arrival time, vehicle details, driver information, electronic payment, digital receipts, and journey records.
That convenience has been one of the biggest reasons for Uber's rapid expansion.
The effect extends far beyond Uber.
Traditional private hire businesses have increasingly adopted online booking, smartphone applications, GPS vehicle tracking, automated booking confirmations, card payments, and electronic driver allocation.
London's black cab industry has also embraced smartphone booking platforms.
The result is that technology introduced by new entrants has influenced the entire passenger transport market.
If Lyft arrives, competition could accelerate that process again.
One of the reasons app-based private hire expanded so quickly was price.
Passengers became accustomed to comparing the cost of an app-booked private hire journey with a black cab, public transport or conventional minicab.
Lyft would need to establish where it sits in that market.
Trying to win passengers through aggressive pricing could be expensive.
It could also trigger a response from Uber and existing London operators.
For passengers, increased competition may look attractive.
For operators and drivers, the economics are more complicated.
London's private hire drivers are not necessarily tied permanently to one operator.
A large new platform could therefore compete with existing companies not only for passengers but for drivers.
That could lead to recruitment incentives and other benefits as companies attempt to build their fleets.
But a new entrant faces a classic problem.
Passengers want an app with plenty of available drivers.
Drivers want an app with plenty of passenger bookings.
Building both sides simultaneously is difficult.
Uber already has enormous scale in London.
This is one of Uber's greatest strengths.
Imagine two apps.
One has thousands of nearby drivers.
The other has relatively few.
A passenger opens both.
The first vehicle can arrive in three minutes.
The second takes 15.
Unless there is a substantial difference in price or service, the passenger will probably choose the first.
More passengers attract more drivers.
More drivers improve availability.
Better availability attracts more passengers.
That cycle is known as the network effect.
Lyft has successfully built such a network in the United States.
Repeating it in London would require significant investment.
Even if Uber ultimately lost its right to operate, passengers would not suddenly be left without private hire services.
London had an enormous minicab industry long before Uber arrived.
Operators range from small neighbourhood businesses to major companies such as Addison Lee.
Black cabs provide another option.
Apps including Gett and mytaxi connect passengers with licensed London taxis.
Other technology companies are also interested in the private hire market.
Lyft would therefore be entering a crowded transport environment rather than an empty one.
There is already evidence of how difficult entering London can be.
Estonian ride-hailing company Taxify launched in London earlier this month but was forced to suspend operations shortly afterwards amid questions over its licensing arrangements.
The episode provides an important warning for any international company considering the city.
London may be an attractive market.
It is also a heavily regulated one.
Launching first and dealing with the regulatory details afterwards isn't a reliable strategy.
Any Lyft application would arrive at TfL during a period of exceptional attention to private hire safety.
The reasons TfL gave for refusing Uber's new licence included matters with potential public safety and security implications.
That means another major app-based operator would probably face detailed examination.
How are drivers checked? How are complaints handled? How are serious incidents reported? How does the operator communicate with regulators? How are booking records maintained?
Technology is only part of the answer.
London's airports generate an enormous number of private hire journeys.
Heathrow alone handles tens of millions of passengers annually.
Then there are Gatwick, Stansted, Luton, and London City Airport.
For an app-based company trying to establish itself in London, airport passengers represent a valuable market.
They often need transportation at times when public transport is less convenient.
Many carry substantial luggage.
International visitors may also prefer direct transportation to their hotel.
But airport private hire work has complexities that ordinary urban journeys don't.
A driver collecting someone from Heathrow can't simply arrive at the scheduled landing time.
The aircraft needs to land.
Taxi to its stand.
Passengers disembark.
International travellers may need to clear immigration.
Checked baggage has to arrive.
Only then does the passenger enter the public arrivals area.
That could take 30 minutes.
It could take considerably longer.
Private hire operators therefore need systems capable of dealing with unpredictable arrival times.
Airport collections can involve parking costs.
A driver may need to enter a terminal car park and wait for the passenger.
If immigration or baggage reclaim takes longer than expected, parking charges can increase.
This makes airport transfers operationally different from a typical journey where the passenger is standing outside an address waiting for the vehicle.
A platform entering London's airport-transfer market needs to understand those realities.
Technology can make an airport transfer more efficient.
Flight information can be monitored.
The passenger can receive booking details.
Drivers can communicate electronically.
But there is still a significant human element.
An international traveller arriving at Heathrow for the first time may want to see a driver waiting in arrivals.
They may need help with luggage.
They may not know where the car park is.
They may not have a working British mobile connection.
These are areas where traditional pre-booked airport services can differ from an immediate app-based journey.
The possible arrival of Lyft says something bigger about London.
The capital has become one of the world's most important testing grounds for new passenger transport models.
Traditional black cabs remain highly visible.
Private hire has expanded dramatically.
Smartphone apps have transformed booking.
Electric vehicles are developing.
Car-sharing is growing.
And eventually autonomous vehicles could change the market again.
For regulators, the challenge is encouraging useful innovation without compromising passenger safety or allowing congestion to become worse.
Not everyone will welcome another major private hire platform.
London's roads are already heavily congested.
Critics may argue that making private hire cheaper and easier encourages additional car journeys.
Operators may respond that technology can make vehicle use more efficient and reduce the need for private car ownership.
The answer is unlikely to be simple.
A private hire vehicle can replace someone's personal car.
It can also replace a journey that might otherwise have been made by Underground, bus, bicycle or on foot.
How London manages that balance will become increasingly important.
Even the largest private hire platform cannot replace London's public transport network.
The Underground carries huge numbers of passengers.
Buses provide extensive coverage.
National Rail connects the capital with surrounding areas.
Private hire fills a different role.
It is particularly useful when passengers need: door-to-door transport, late-night travel, help with luggage, group travel, or journeys poorly served by public transport.
Airport transfers are a good example.
From a commercial perspective, Lyft could hardly have chosen a more interesting moment to consider London.
Uber's future is uncertain.
The private hire market is receiving enormous publicity.
Passengers are discussing alternatives.
Drivers may be considering their options.
And competing transport companies are examining opportunities.
Yet Lyft's discussions with TfL began before the current Uber crisis.
That is important.
This isn't simply a company suddenly attempting to exploit a competitor's bad week.
The conversations suggest London had already been on Lyft's radar.
Lyft has grown rapidly in America.
Eventually, a successful company in a market of that size faces an obvious question: where next?
London would offer enormous prestige.
Successfully entering one of the world's biggest and most heavily regulated private hire markets could provide a platform for wider European expansion.
But Europe isn't simply another version of the United States.
Different countries have different taxi and private hire regulations.
Even individual cities can have very different rules.
International expansion could therefore prove considerably more complicated than domestic US growth.
If Lyft does decide to launch here, the company will face one of the toughest tests available.
It will need regulatory approval.
It will need drivers.
It will need passengers.
It will need to compete with Uber's enormous existing network.
It will face established private hire companies.
It will operate alongside one of the world's most famous taxi trades.
And it will need to prove that its systems satisfy London's safety requirements.
Success would be significant.
Failure could be expensive.
Despite all the speculation, there is no Lyft car waiting around the corner in London today.
No launch has been announced.
There is no confirmed timetable.
The company's discussions with Transport for London show interest and engagement, but they should not be mistaken for a commitment to enter the market.
That could change.
Lyft has made its international ambitions clear.
London is an obvious destination.
And events surrounding Uber have suddenly made the possibility much more interesting.
The next chapter in London's private hire revolution may therefore be beginning.
But for now, Londoners will have to wait and see whether the pink Lyft logo that has become familiar on American streets eventually appears here too.
The possible arrival of another app-based private hire company would increase the choices available to London passengers, but airport travel remains a specialist part of the private hire market.
London Airport Transfer provides pre-booked private hire journeys to and from Heathrow, Gatwick, Stansted, Luton and London City Airport, including transfers between airports and journeys to London hotels, businesses and residential addresses.
Unlike a London black cab, a private hire vehicle must be booked through a licensed private hire operator.
That applies whether the passenger makes the booking by telephone, online or through a smartphone application.
For airport journeys, booking in advance can be particularly useful because the operator has details of the flight, pickup airport, destination, passenger requirements and luggage before the journey begins.
International arrivals also involve uncertainties that ordinary journeys do not.
Flights can be delayed.
Immigration queues vary.
Baggage may take time to arrive.
And the passenger may be unfamiliar with the airport.
Whether London passengers eventually book through Lyft, Uber or a specialist airport-transfer operator, the underlying principle remains the same: the private hire booking must be made through an appropriately licensed operator.
Lyft's discussions with TfL demonstrate just how attractive London's transport market has become.
They also demonstrate that entering that market requires considerably more than simply launching an app.
Written by London Airport Transfer for passengers travelling to and from London airports.