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Cabcharge CEO wins back Millennials in Uber fight in NSW and the tide is turning

New lease of life for the taxi industry

Andrew Skelton, the chief executive of taxi payments company Cabcharge, said there had been a substantial upturn in bookings made through its 13CABS app among the younger demographic after a $6 million investment in new technology and marketing through 280 billboards and cinema advertising.

Value and the absence of surge pricing at busy times is one of the main drivers of increased usage.

“We’re beginning to crack the code of the younger demographic,” Mr Skelton said. “High school leavers and young professionals are increasingly looking at taxis as an option.”

While the arrival of hip overseas entrants such as Uber caused major structural shifts in the personal transport market, economics was now a major consideration among users.

Mr Skelton said taxis offered clear and consistent pricing that didn’t jump in a “surge pricing” model at busy times, which was at the heart of the business model of ride-sharing competitors. “People are looking at the value more closely.”

The heavy investment in 13CABS was gaining traction across the market, including with the younger demographic. “We’re starting to come to life,” he said.

Mr Skelton said the number of bookings made through the 13CABS app had risen by 4 per cent in January. That compared with a 12 per cent decline in July.

Cabcharge is undertaking a dramatic revamp of its business after being hit hard by changes in government regulations in Australia and by sharp cuts to commissions on a near-monopoly in its payments network inside taxis.

This has occurred at the same time as ride-sharing firms such as Uber and Taxify have expanded into Australia.

Cabcharge shares are trading at $1.82, having fallen 45 per cent from $3.27 over the past 12 months.

Tide is turning stated by Mr Skelton who argues the it’s happening, with one of the most important milestones being that total taxi fares processed in the first half of 2017-18 increased.

They were up by 1 per cent to $515 million. It marked the first time in two years that downturn has been stemmed.

The company suffered a bottom-line loss of $5.1 million for the first half after impairment charges of $12.3 million on the write-down of the value of taxi licence plates.

Total revenues were up 13.8 per cent to $90 million, but would have gone backwards if it wasn’t for a $15.5 million revenue contribution from the Yellow Cabs in Queensland, acquired last year for $20 million. That brought an extra 1200 taxis into the fleet in that state.

Analysts say the personal transport market is likely to grow by between 3 and 5 per cent annually over the next few years in Australia, as population growth soars and major cities become more congested. European players such as Taxify have also entered the ride-sharing market in Australia.

Mr Skelton said Cabcharge was pursuing profitable growth and wasn’t interested in chasing market share growth for the sake of it. “We deliver service in a profitable manner.”

Cabcharge has rebuilt itself and was heading in the right direction with a profitable, sustainable business model, he said. The company cut its interim dividend to 4¢ per share from 10¢ a year earlier, and will pay it on April 30.

He said the fastest growth in take-up of 13CABS had been in Sydney, which he attributed in part to a shift across the industry away from the “historical rank and hail” structure.

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