Too much competition, too little cabbies

Adrian Lim
The Straits Times
Monday, Jan 16, 2017

More cabbies are throwing in the towel and exiting the taxi trade, underscoring the stiff competition they are facing from private-hire services like Uber and Grab.

Land Transport Authority data revealed that in the first 11 months of last year, the average rate of taxis that were unhired was 5.9 per cent, up from 4.2 per cent in 2015.

More than 1,620 taxis are now sitting idle in the yards of taxi companies, up from 1,190. This, even as the total fleet of taxis in Singapore has shrunk, from 28,300 at the end of 2015 to 27,500 currently.

The rise in the number of unhired taxis has prompted a second operator to slash rentals. Premier, with over 1,900 cabs, has cut its net rentals to mostly below $100 a day, a spokesman told The Straits Times.

In doing so, it follows in the footsteps of Trans-Cab, the second biggest operator here with 4,500 taxis, which has cut rental fees by between 22 per cent and 34 per cent for drivers hiring without a relief.

A Premier taxi driver, who did not want to be named, said he signed an incentive scheme starting last week that will allow him to earn incentives of $300 a month, as well as a $1,000 bonus if he completes a six-month-long contract.

Premier said it is offering such schemes to "support our drivers whose incomes have been affected by the sudden surge in the supply of taxis in the form of private-hire vehicles". Its rate of unhired taxis was "consistent" with the competition. Trans-Cab said last month that 11 per cent of its cabs were not hired out.

ComfortDelGro, Singapore's largest operator with over 16,700 taxis, did not respond when asked if it would be adjusting its rental rates.

The job of a taxi driver has become increasingly unattractive since Uber and Grab entered the market in 2013, say observers and drivers.

With no cap on private-hire vehicles allowed to roam the roads, the number of "taxi-like services" has boomed, said Dr Park Byung Joon, a transport expert at SIM University. "This has created a negative impact on the income potential, and becoming a taxi driver is less attractive."

There are about 25,000 Uber and Grab cars here. While private-hire operators also have unhired cars - nearly 1,000 as The Sunday Times reported yesterday - this is a matter of the market needing to reach equilibrium point, said Dr Park.

The challenge for taxi companies is more fundamental, he noted, adding that the authorities need to rethink what a "taxi" is. In its traditional form, taxis cannot compete with Uber-type businesses permitted to operate in Singapore, he said.

Meanwhile, taxi drivers said they are thinking of switching firms. Comfort cabby K.Y. Yuen, 40, who pays a daily rent of $110, said: "I'm hoping Comfort will cut the rental in time. If nothing happens after one or two months, I will jump to another firm."

He said his earnings are down by 20 per cent, especially at night when passengers want to avoid taxis' midnight surcharge.