With Uber and Grab, are taxis still necessary?

Adrian Lim
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?


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."


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.


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. 


"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.

The Straits Times

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