Pay more to jump taxi queue

The iPhone-based system, known as Ingogo, has shaken up the "first come, first served" system run by established networks including Taxis Combined, which is backed by the Cabcharge empire of taxi kingpin Reg Kermode.

But the new system has come under pressure from the Taxi Council and there are questions about whether it is breaking the law.

In the eight weeks since it launched, Ingogo has signed up almost 1000 taxi drivers in Sydney and its app has been downloaded by 34,000 passengers who can offer to pay any amount to a driver and place a deadline by which they must be picked up. Passengers can also watch their taxi approach on their phone through Google maps and stay in direct communication with the driver.

Taxi drivers have been lured by the prospect of large tips, particularly at Christmas and New Year when passengers are often willing to pay an extra $100 on top of a fare, drivers told The Sun-Herald.

The founders of Ingogo include Brad Shofer, co-founder of accounting software company MYOB, Hamish Petrie, founder of concert tickets website Moshtix, and Will Easton, a Google executive.

Mr Petrie said the company has a fight on its hands to crack an industry in which heavyweight interests have failed, such as Macquarie Bank with its doomed Lime Taxis business.

He told The Sun-Herald bureaucrats have warned him the Taxi Council, which is funded by the major taxi companies, is actively lobbying against Ingogo. "We've been told, 'The Taxi Council is working hard to shut you down,"' Mr Petrie said.

In a newsletter to drivers, Taxis Combined warned the use of mobile phone booking systems "might be illegal". Ingogo has been angered by a draft policy document from the government's transport department, seen by the The Sun-Herald, which states that hand-held devices like mobile phones are not allowed to be used unless the taxi is stationary and with the handbrake applied. A department spokesman said the use of mobile phone-based booking systems was "currently subject to legal consultation and review".

A spokeswoman for the Taxi Council, Tracey Cain, said it had expressed concern that phone-based networks could be open to abuse. "We need to make sure [technology is] not used to match unidentified people with unidentified passengers off the radar of safety," she said.

Ingogo is likely to face more pressure over the use of inducements. Passenger Transport Regulations introduced in 2007 forbid drivers from demanding or entering into an agreement to accept more than the authorised fare for any hiring of a taxi.

A driver who is using the Ingogo system, but did not want to be identified, said: "On a wet New Year's Eve, it's a million-dollar taxi but you do get home, that's the world today - short supply, higher price."

with Tim Barlass