With Uber and Grab, are taxis still necessary?
The Straits Times
Friday, Jan 13, 2017
Cheap and easy private car-hire companies are leaving
taxis in the dust. Given the less regulated nature of the newbies,
what is being done, or needs to be done, to level the playing field
for taxi companies - to keep them in the game, and cabbies in a
job?
For the past six months, insurance agent Mervyn Tan,
51, has stopped taking taxis to get around town.
Instead, Mr Tan relies on ride-booking apps such as
Uber and Grab, which can be 30 per cent cheaper on average than a
cab during the off-peak hours, he says.
If he shares the private-hire car with another stranger
going his way, the fees go even lower, about 40 per cent less than
that of a taxi.
Mr Tan is one of a growing number of commuters who are
swopping conventional taxis from the likes of household names such
as Comfort and CityCab, for vehicle-booking services that have
sprung up over the past two years.
What Mr Tan also likes about these apps is that fares
are quoted upfront and are fixed, so if he gets caught in a traffic
jam, the charges will not go up, unlike in a taxi with a running
meter.
And you don't have to pay a midnight surcharge,
either.
Ride-hailing apps also dangle discounts, such as $5 off
car-pooled rides, that further sweeten the deal.
Operating in a less regulated environment, it is no
wonder, then, that Uber and Grab have been able to rapidly expand
their ranks of drivers and cars.
It is estimated that their combined fleet is in the
region of 25,000, edging close to the island's 27,500 taxis.
To commuters, this must seem good news.
After all, a ride is a ride - be it taxi company or
private-hire service; what matters is price and convenience.
That is how the marketplace operates.
However, there are other aspects to consider.
Even as commuters enjoy rides with Uber and Grab, do
they really want to see Singapore's traditional cab companies hit
at their expense?
There are issues of nostalgia and national identity
tied up with those quaint names of Comfort and the like - not to
mention the livelihoods of tens of thousands of cabbies.
Many are less educated and might not be able to find
other jobs, let alone work for app outfits like Uber.
What is being done to balance the scales?
Can more be done - especially by the transport
stalwarts and the drivers themselves?
GRABBING AN EDGE
Indeed, Prime Minister Lee Hsien Loong said in August
last year that the playing field is not quite level for the
incumbents.
He noted then that the taxi sector was still subject to
some extra rules - for example, statutory requirements made
operating taxis more expensive.
A taxi operator's ability to expand its fleet hinges on
whether it can meet availability standards spelt out by the Land
Transport Authority (LTA) - which include ensuring that the bulk of
its fleet are on the road during peak hours, failing which it can
be fined.
In comparison, Uber and Grab have free rein to grow
their fleets - their vehicles only have to be commercially
registered and insured.
Furthermore, to be a cabby, one must be a Singaporean
and at least 30 years old, while for Uber and Grab drivers, the
minimum age is 21 and both Singaporeans and permanent residents are
accepted.
Because of stiff competition and the unbridled
expansion of private-hire car services, cabbies' business has been
hit and many are lamenting that they are suffering, with fewer
passengers and lower earnings.
Take Raymond Ong, 57, who said: "Incomes have fallen by
between 20 per cent and 30 per cent, mainly due to competition.
There are also other factors, such as a slowing economy and more
public transport options."
He declared: "Competition is good, but it should be
fair."
BECOMING A TWO-WAY STREET
Already, some measures have been introduced to level
the playing field.
Notably, the requirement for taxi drivers to clock a
minimum daily mileage of 250km has been scrapped, effective this
month.
And in May last year, the LTA reduced the duration of
the taxi driver's vocational licence course from 60 hours to 25
hours.
Cabbies who are active, with no demerit points, will
also be exempted from refresher courses.
The private-hire industry also has to smarten up its
act.
New rules will kick in by the first half of the year,
requiring such drivers to be vocationally licensed, after
undergoing a 10-hour course - somewhat similar to taxi drivers.
As well, vehicles used for Uber and Grab must be marked
with decals and drivers will have to display their licences
prominently in their cars, among other requirements.
A new regulation was also proposed in Parliament on
Tuesday to allow the authorities to suspend Grab and Uber for up to
a month if their drivers do not have the proper licences and
insurance.
But tweaking regulations is just one side of the
coin.
There needs to be other changes in the industry, from
cab operators and taxi drivers themselves, so the incumbents can
effectively compete with the disruptors.
OPERATORS WOES - AND
SOLUTIONS
Trans-Cab, the island's second- biggest taxi operator
with a fleet of over 4,500, slashed its cab rental rates in a bid
to reel in more hirers. Rental fees for taxi drivers running the
cab themselves - without a relief driver - were cut by between 22
per cent and 34 per cent, depending on the taxi model.
Lowering rentals is without doubt a bottom line-driven
decision by Trans-Cab, which had 500 out of its 4,500 taxis, or
about 11.1 per cent, sitting idle in the yard when it announced the
move late last month.
It was welcomed by taxi drivers as it helped lower
their overheads.
Many cabbies are also optimistic that Trans-Cab's move
will prompt other operators to do likewise to stay competitive.
There is room to manoeuvre.
Locally listed ComfortDelGro Corp - which owns the
largest fleet of over 16,700 taxis here, and which has taxi
operations overseas including in Australia and Britain - posted an
operating profit of $47.3 million from its taxi business in the
third quarter of last year.
This is 1.5 per cent higher than in the same period the
year before.
For cab operators, keeping their rental rates
competitive ensures that there is a healthy supply of taxis -
keeping them in the game.
But even as rentals fall, taxi drivers need passengers
to get an income.
One gripe is that business at night has been hit
especially hard because passengers are opting for private-hire
services, as they do not impose a 50 per cent midnight levy.
Cab operators should simplify the current taxi fare
structure, which many commuters also find confusing.
Flag-down fares range from $3.20 to $3.90 and there are
at least 10 different types of surcharges.
In comparison, commuters who use Uber and Grab are
quoted an upfront charge when they book.
What about cutting fares further - will this dent the
incomes of taxi drivers?
Whenever Uber slashes its fares, it says that lower
fares mean higher demand from passengers and, hence, more trips for
its drivers.
Cab firms should study how lowering fares and
simplifying them can win back commuters, and help cabbies generate
more income without hurting them.
WHAT DRIVERS COULD DO
"Sweeping the street", which in cabby lingo means
picking passengers from the kerbside, continues to be an important
source of business for taxi drivers.
Street-hails accounted for about 75 per cent of taxi
rides between January and September last year, according to data
from the LTA.
Bookings comprise the remainder - with two-thirds of
these made via the taxi operators' own booking channels, such as
mobile apps and phone hotlines.
The remaining third are bookings through third-party
bookings apps.
For taxis, picking up street-hails is an advantage they
have over private-hire cars, and one which the Government is likely
to preserve.
Allowing private cars, even if they are Uber- and
Grab-registered, to do so would run the risk of having Singapore
return to the days of "pirate" taxis in the 1960s.
Ride-hailing apps, on the other hand, work because
fares are set beforehand, with the behaviour of drivers and
passengers monitored through the apps' system of ratings and
reviews.
But while street-hails are an advantage, picky cabbies
who decline to ferry customers to far-flung locations such as Tuas
have been a long-time bugbear.
This has to change. Commuters who use Uber, for
example, do not face this problem, because their destinations are
made known to drivers only at the point of pickup.
Cabbies should also play to their strengths, such as
having a good knowledge of routes and a keen understanding of
traffic conditions.
In contrast, their private-hire rival might be a driver
who is a part-timer just trying to make a quick buck.
In London, black-cab drivers have to pass the
Knowledge, a geographical test which requires an average of about
three years of study, and has students memorising 25,000
streets.
While Singapore's cabbies have to undergo only 25 hours
of training, they can take a leaf out of the London drivers' books
and aspire to be encyclopaedias of Singapore's roads.
Another suggestion: Uber and Grab drivers are expected
to consistently deliver good service because they are rated by
passengers after every ride, and falling short could earn them a
suspension or expulsion.
Taxi companies can look into incorporating such a
system.
Regulations - whether favouring the incumbents or
hindering the new players - are but one part of the equation.
To keep up with the competition, taxi operators need to
innovate and find new ways to help their hirers, while cabbies need
to up their service game to win customers over.