The Case Against “ON DEMAND” Limo Service

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If you’ve been paying attention to any of the media hoopla surrounding the proliferation of “on demand’ Smartphone limousine apps, you probably realize that there are a lot of highly skilled (and very highly paid) marketing people painting a fairly black and white picture of our industry. Most notably, these app companies like to point out that the limousine industry is “afraid” of technology, and is fighting the implementation of their technology because it exposes the unfair costs that limo companies charge their customers, citing that vehicles running their app charge significantly less for the same service.

I’m afraid this information is not just wrong…these are outright lies. Unfortunately, a company of our size (or almost any company in our industry), can’t possibly match the war chest behind these apps, so it’s difficult to mount any sort of successful educational campaign to get the truth out to unsuspecting travelers. However, here are a few bits of information that might be of interest. Feel free to pass them along.

First, limousine companies are NOT afraid of technology…our industry embraces technology. Our biggest obstacle is the cost, which can reach into the hundreds of thousands of dollars, depending on what level of commitment is involved. Keeping in mind that the average limousine company typically works on very small percentages, you can see why technology has been slow to catch on. It’s easy for app companies to “throw stones”, because they are NOT limousine companies. They don’t have the issues involved in running a service oriented business, such as building and maintaining a fleet, vehicle licensing and operational costs, drivers, taxes, and other necessary fees to operate a legal service. Instead, an app company can misrepresent itself as a limousine company by offering technology to “summon” a limo. This is where the app goes its own way. Once the request if sent out, the app company is no longer involved. There are no service level agreements, no insurance verification protocols, there isn’t even a guarantee that the car coming is legal to operate. If the car doesn’t show as promised, there is no office to call, no dispatcher or customer service. It’s just an app…an app that pretends to be a limousine service.

On demand app companies typically advertise rates that are significantly lower than a real limousine service. This is simple to do, once you understand the pricing dynamics employed. Since an app does not operate any vehicles, they depend on an ever growing pool of individuals with vehicles in various states of repair, to handle their clients. These operators and vehicles are not under the control of any particular company, so someone looking to make a few dollars with an older vehicle (minimal or no payments), the minimum insurance required by the city or state, and no other overhead, can typically run at a fraction of the cost that a real limousine company would. But wait…don’t forget “special pricing”. During normal, ho hum periods of the day, those cheaper rates apply. However, during peak periods and high demand situations, special rates apply, which in some cases are in excess of what a real company would charge. Go figure. The same vehicle and route that cost you $25.00 at noon on Saturday could be several times more expensive on Friday afternoon during rush hour. That could make setting up your travel budget a little tricky.

Finally, I will admit that there are plenty of operators that feel as though on demand Smartphone apps are evil, and the bane of our collective existence. I tend to disagree. If nothing else, the influx of this technology has hit our industry like a cold slap in the face. We needed this challenge to wake us up from decades of complacency and acceptance of the status quo. Now, when people in the industry get together, the subject of apps and on demand services almost always comes up, and some great ideas are discussed. Many companies (including O’Hare-Midway) have launched their own Smartphone apps to perform various customer friendly functions, and it won’t be long before every reputable limousine service has one. Until then, consumers should avoid buying in to the hyperbole associated with Smartphone apps, and more importantly, the criticisms being leveled at the limousine industry.

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Dale Schahczinski
Goal driven team leader, with industry experience spanning all aspects of operations and administration.