London taxi app Hailo says it is ditching its private hire service in London and is returning to black cabs only.
The news comes after London’s transport regulator TfL proposed tough new rules for private hire companies like Uber — and as Hailo is seeking a crucial new round of funding.
Hailo historically offered its services to London’s traditional black cabs only. But in May 2014, as ride-hailing service Uber grew in popularity, it opened its platform up to other private hire vehicles. The response from London’s taxi drivers was negative: The BBC reported at the time that its HQ was vandalised and a fight also broke out during protests outside.
In September, Business Insider reported that the company was in talks with multiple investors. If the funds don’t come through, it could be forced to scale back operations — although the company has denied it would close down if it does not raise new funds by Christmas. In a previous statement, the company said that “all companies in the early or growth stages of their life cycle, like we are, are always open to opportunities to raise funds to grow and deliver the best possible service for our customers.”
It is not immediately clear how the resignation of its private hire licence relates to its fund-raising efforts.
Hailo has published a blog post attributed to CEO Andrew Pinnington, who joined nine months ago after the company pulled out of the US. He writes that “since being in charge of Hailo from the beginning of the year, it’s become apparent to me that Hailo and the taxi trade need to be more united to build a stronger future together. To achieve this we have made the decision to resign our private hire licence and return to black cab only in London.”
He continues: “As a company founded by Cabbies, Hailo was made strong by its original connections to the taxi trade and we feel we’ve drifted too far from it. We have consulted extensively with the trade unions who have all backed our decision. We are doing this as it’s routed [sic] in a genuine belief that you, London’s black cab drivers, provide the public with a crucial service.”
In 2014, Hailo made a loss of £21.5 million, according to The Independent, due to aggressive expansion plans. It still operates in Ireland, Spain, Singapore, and Japan, as well as the UK.
Earlier this week proposals to introduce new regulations on the private hire trade in London were made public. The suggested rules include imposing a mandatory five-minute wait time for vehicles before arrival, requiring drivers to only work for one operator at a time, and the introduction of better disability access.
These proposals would make it far harder for Uber and other private vehicle ride-hailing apps to operate in the city. Uber has already begun to fight back, launching a petition calling on TfL to reconsider. It has already gathered more than 110,000 signatures.
London business group the Institute of Directors has also slammed the proposals, arguing they would “damage London’s reputation” for innovation.
The established black cab industry in London feels threatened by the growth of Uber, a Californian company. Black cab drivers held protests in June, blocking streets and bringing parts of London to a standstill.
Uber encounters frequent protests from taxi industries across the globe as it expands — as well as regulatory crackdowns. Two executives are facing trial for alleging flouting the law in France, although the trial has now been postponed until February.