The challengers to London’s black cabs

Cars waiting to be serviced at an Islington garage

On the few occasions that Andrey Glaschenko has visited London, he has never driven a car. The 28-year-old Russian computer programmer finds the idea of driving on the left intimidating. “It was hard for me even to cross the road as a pedestrian,” he admits. This has not stopped Glaschenko immersing himself in the capital’s traffic, however.

Working from offices in Samara, a city in the west of Russia, Glaschenko has been remotely mapping the streets of London, using global positioning system (GPS) data collected by London’s largest minicab operator, Addison Lee.

The data track the movements of Addison Lee’s cars during a three-year period. Glaschenko and a colleague at Haulmont Technology, a software consultancy employed by Addison Lee, have been using the archive to create a grid-like model that predicts how long a given journey should take at different times of the day. “It is really a treasure, this amount of data that we have,” says Glaschenko.

Addison Lee is now using these journey time estimates to change the way it allocates jobs to its vehicles, with the aim of getting to customers faster. It also wants to incorporate the work into its satellite navigation system so that its drivers are given better routes, based on the past experience of the overall fleet.

This sort of project is meat and drink to Glaschenko, who comes from a tech-savvy family. His parents both carried out defence-related aerospace work in Samara during the cold war and he relishes the mathematical and logistical challenge. The involvement of Addison Lee, on the other hand, is incongruous at first glance. Put bluntly, most Londoners would not expect a minicab operator to be engaged in cross-border software development, just as they would not expect their local curry house to be sequencing the human genome.

Minicabs are booked at a call centre in Islington

Minicabs are the poor relations of black taxis and to many people they still have an aura of second best that dates from their first appearance on the city’s roads in 1961 as a cheaper alternative. They cannot be hailed from the street and must rely on telephone and internet bookings and walk-in reservations at often scruffy offices. Nor do their drivers have “the Knowledge”: the comprehensive mental map of routes that takes most would-be black taxi drivers about three years to learn.

More significantly, today’s minicab trade in London is extremely fragmented: a cottage industry, by and large. Although there are nearly 50,000 minicabs in the city – more than twice the number of black taxis – the vast majority of operators run fewer than 10 vehicles and their ambition is commensurate with their microscopic scale. Above-board businesses also have to deal with the reputational damage inflicted by illegal rivals. This year a Transport for London poster campaign warned Londoners that they risked sexual assault if they took an unbooked minicab.

Addison Lee, however, is an exception to the norm. A very big exception. After starting with one car 35 years ago, it now rents 2,400 minicabs to self-employed drivers and its black Ford Galaxy and VW Sharan people-carriers are familiar sights across the city. Each back window bears a large company logo, whose growing ubiquity has been reinforced by thousands of Addison Lee-branded outdoor ashtrays that were distributed free to businesses hit by the ban on smoking indoors.

The black Addison Lee people-carriers have become a familiar sight in London

Oddly, these ashtrays do not say what the company does (it reckons the mystery makes the name lodge deeper in the subconscious). But many London-based professionals already know. Addison Lee has made serious inroads into the city’s corporate travel market by promising to be on average 35 per cent cheaper than black taxis, though the latter are actually less expensive for short hops. It says that half the FTSE 100 has an account.

Emboldened by its growth, Addison Lee is jostling increasingly with black taxis – and the journey time prediction software is one of its more subtle attempts at encroachment. The aim of the project is to make the company’s drivers better able to compete with the Knowledge. It is a demanding goal, but one that does not worry Larry Scicluna, head of IT in the Addison Lee control room near Euston rail station.

Sitting in front of a wall of computer screens that would not look out of place on the trading floor of an investment bank, Scicluna says the industry has come a long way. Back in the 1980s, before he joined Addison Lee, he drove a minicab without a working heater for an entire winter – a failing that had to be masked by fibs. “People would say, ‘it’s cold in here,’ and I’d say, ‘I’ve just started [my shift]’. We did have a bad reputation,” he admits.

Having started with historic GPS data, Scicluna says the longer-term plan is to feed real-time information from the fleet into the Addison Lee computer system, enabling its drivers to avoid traffic snarl-ups as they happen. Unsurprisingly, not all share his optimism about the perfectibility of sat nav devices, whose accuracy has often been questioned.

“It’s all bullshit,” says Bob Oddy, general secretary of the Licensed Taxi Drivers Association, which represents many of the city’s black taxi drivers. A diehard believer in the primacy of the Knowledge and the inadequacy of sat nav-dependent minicab drivers, Oddy doubts that any tweaking will make a mere machine equal to the street smarts of his members.

However, others in the black taxi trade are not so quick to write off the threat posed by Addison Lee. Their caution appears justified: there are plenty of signs out there that the company’s takeover of London is a work in progress.

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I first became aware of Addison Lee in 2008 when I was attending an antenatal class with my wife near our home in central london. The conversation turned to how we were to get to the hospital when labour began. Were we to flag down a black taxi and pray he didn’t speed past us in horror when the nature of our journey became obvious? Or were we to rely on the questionable skills of a driver from the local hole-in-the-wall minicab office?

In this nervous atmosphere, the Addison Lee telephone number was passed around like a tranquillising blast of gas and air. Its cars were by no means the cheapest but they were sure to show up, we were told. Better yet, the driver would not bolt at the prospect of transporting a labouring woman to the delivery room.

My wife and I were duly ferried to St Thomas’ Hospital in the back of an Addison Lee minicab – twice as it turned out, since in both cases, the cars seemed to have an uncanny ability to stop labour in its tracks. But each trip was prompt, reliable, clean and sensitively driven – far superior to my previous London minicab experiences (especially the time I was driven to Heathrow by someone who appeared drunk or stoned).

Founder John Griffin, at home in Potters Bar, caused a row by telling his drivers to use the bus lane of the M4 for Heathrow trips – a privilege jealously guarded by drivers of black taxis

My recruitment as an Addison Lee customer was a textbook example of how John Griffin, the company’s 67-year-old founder and chairman, likes to build brand awareness. In spite of all the logo-bearing ashtrays, “we feel that word of mouth is the best form of advertising,” he says.

With his torrent of opinions, it is easy to picture Griffin as the minicab driver he once was. Some of his pronouncements – “recession is colonic irrigation for the economy”, for instance – feel like excerpts from a monologue directed into a rear-view mirror.

The Bentley-driving multimillionaire’s career could have taken a very different path. In the late 1960s, Griffin was articled to an accountant when his father’s road and sewer construction business ran into trouble. He left accountancy to help out and started driving minicabs on the side.

In 1975, Griffin set up Addison Lee in Battersea’s Queenstown Road. By then minicabs were an established part of the London landscape – too established, for Griffin’s liking. “It seemed that every second doorway was a minicab firm,” he recalls. But this did not mean that those businesses knew what they were doing, he says: “It was a very, very poorly run industry.”

The thwarted accountant felt he could do a better job of the management basics. He says he tried to differentiate himself by treating drivers and customers well – refusing to lie to the latter about how long a car would take to arrive, for instance. But he admits he was not above some iffy salesmanship in the early days, traipsing around office blocks and telling businesses that their neighbours had signed up for an account.

Griffin’s stern demeanour also helped. Back in the early days, he says, drivers tended to be in some form of emotional or financial distress, making close oversight essential. The advent of minicab licensing in 2003-04 has made the sector more professional, but Griffin still sees himself as a strict operator. He needs to be strict, given the risk that one rogue driver could damage the reputation of the whole business.

The company also boasts about its training credentials. They are modest by Knowledge standards but it points out that the driving course it administers in-house is regulated by Ofsted, the UK schools and further education inspector, which found it to be of a good standard. Addison Lee drivers also receive a few hours of training in customer service – an area in which drivers of black taxis are sometimes found wanting, for all their topographical expertise – and are encouraged to wear jackets and ties.

Griffin is starting to get broad recognition for building Addison Lee into a slick franchise with a turnover of almost £90m and a pre-tax profit of £6.4m in its 2007-08 financial year, the last for which accounts have been published. Last year, he was a regional winner in the Ernst & Young Entrepreneur of the Year awards.

These days, however, Addison Lee is not a one-Griffin show. His son Liam, managing director, has played an influential role in its recent growth, which has been driven partly by the acquisition of weaker rivals during the recession. Liam’s brother Kieran is sales and marketing director; both siblings race cars bearing the Addison Lee logo. Might a flotation eventually be on the cards? That might cramp the company’s style, says Liam: “We intend to keep it as a family business.”

. . .

People-carriers in the 2,400-strong fleet are serviced in Islington

The tension between the black taxi trade and minicabs stretches back many years. In April 1961, Time magazine reported on early skirmishes, quoting a minicab driver named Jim Buntin who described “in the awed tones of a lone survivor of Custer’s last stand” how he had been blockaded in Belgrave Square by black taxis resentful at losing business to the interlopers. More recently, ire has tended to be directed primarily at the cowboy minicabs who tout for business illegally, particularly outside central London nightclubs.

But in 2009 two provocative moves by Addison Lee put the company firmly on the radar as a parallel threat to its black cab rivals. The first flashpoint came at Heathrow last summer, in the form of a pilot scheme proposed by BAA, the airport’s operator. According to Addison Lee, the test would have given it a booking facility in the baggage retrieval area of terminal three, allowing passengers to reserve a car as they arrived. Radio Taxis, a booking service for both black taxis and minicabs, would have gained a similar foothold at terminal five.

Understandably, black taxi drivers reliant on the walk-up trade protested. They were joined by Bob Crow, leader of the hard-line RMT transport union, which started recruiting London taxi drivers in 2008. “If we don’t do nothing, I’ll tell you who’s going to be here for a long while – Addison Lee and other [mini] cab drivers,” he told a grim-faced crowd. BAA retreated amid talk that airlines had warned it not to provoke a blockade.

The second flashpoint concerned the bus lane of the M4 motorway that runs into central London from Heathrow. Fed up that black taxis were allowed to join it but Addison Lee minicabs were not, Griffin told his drivers last August to ignore the law and use the lane as a quicker way into the city. If stopped by the police, they were ordered to opt for a court hearing instead of paying an on-the-spot fine.

Black taxis can use bus lanes across London. If minicabs are allowed to join them on the M4 lane, the taxi drivers fear that a similar infiltration would occur across the city. Oddy says his members deserve preferential treatment because all taxis have to be able to carry wheelchairs – one of the requirements that pushes up the purchase price of a London taxi to vertiginous levels compared with minicabs.

In due course people-carriers are spruced up on the forecourt and sold on

“He wants the benefit of travelling in bus and taxi lanes – he would, wouldn’t he?” says Oddy, adding that buses would be slowed down by any relaxation of the rules. The RMT says it is unfair of Griffin to demand that his drivers risk getting penalty points on their licence since that is a punishment that Addison Lee cannot absorb for them. “He is putting their livelihoods in jeopardy,” says Eddie Lambert, chair of the RMT’s London taxi branch. So far more than 100 Addison Lee drivers have been ticketed for flouting the M4 rules and a handful have been summoned to court. The company is preparing to defend the drivers by claiming that the rules breach competition laws.

In his manoeuvring to get a better deal for his company, Griffin insists that he has not received any benefit from a £25,000 donation Addison Lee made to Boris Johnson’s successful 2008 London mayoral election campaign. He says he supported Johnson only because he opposed Ken Livingstone, who was “far too left of left” for Griffin’s liking. “We have had no favours from Boris,” he says.

One of the key people he would need to win over in order to get into London’s bus lanes is John Mason, the man in charge of regulating taxis and minicabs at Transport for London, the city’s transport authority. However, Mason says there are no plans to change the rules in Addison Lee’s favour.

But even if Griffin does not get his own way in this battle, there seems little sign that Addison Lee’s growth is in any danger of stalling. The company remains acquisitive and has access to enviable economies of scale for such a fragmented industry. And then there is also the organic growth that comes from just doing the small things better. “Success is a fractional move every day,” he says. “It is fractions, fractions, fractions – we are chiselling away at fractions.”

Adam Jones is senior companies reporter at the FT.