Malaysiakini Letter

Taxis play crucial role as equalisers

YS Chan  |  Published:  |  Modified:

LETTER | Taxis are needed to provide a counterbalance to private cars using mobile apps to pick up passengers.

The main reason why private cars are more popular nowadays is simply because they are cheaper than taxis using higher metred fares.

Uber and Grab have been subsidising fares to capture market share and would increase them later on when the number of taxis are greatly reduced.

Contrary to popular belief, e-hailing in this country was not pioneered by Uber, which entered the Malaysian market in 2014.

Several taxi apps were already in operation for the public to book taxis through e-hailing. They included MyTeksi, UniCabLink, TaxiMonger and Easy Taxi.

All taxi apps allow passengers to rate drivers and give feedbacks, and there are about 20 in the local market. But on average, each get no more than one percent of the total market share of licensed taxis and private cars combined.

UberX was introduced to the Klang Valley offering RM1.50 as starting fare, RM12 per hour and 55 sen per km, when budget taxi rates were RM3, RM17.14 and 87 sen respectively.

It could have offered the same rates as regulated fares or higher and still capture the market with better service.

But it was ruthless against taxi apps and drivers had no regard for local laws and authorities and succeeded in getting gullible drivers to operate as pirate taxi service. The unlucky drivers had their cars seized by the Land Public Transport Commission (SPAD).

However, Uber did not count on MyTeksi adopting their business model and morphing into Grab, which gave Uber a run for its money in Southeast Asia.

Grab today is valued at more than US$6 billion (RM25.7 billion). Uber’s valuation was only US$60 million (RM257 million) in 2011 but shot up 1,133 times to US$68 billion (RM291 billion) by December 2015.

If Uber and Grab’s valuations were based on profits, these companies would be worthless. Uber has never been profitable, losing US$2.8 billion last year alone.

Their valuations were based on capturing market share and building up their customer base, as data is the new currency.

Both Uber and Grab went all out to compete with each other by offering low fares to attract customers and providing incentives to recruit drivers.

As a result, taxi drivers suffered. Most passengers using mobile apps for e-hailing would prefer cheaper private cars than taxis charging higher regulated fares.

Not long ago, I booked GrabCar to the airport but was picked up by a taxi, as the driver chose to participate as a GrabCar instead of GrabTaxi.

But most taxi drivers are adamant in sticking to their higher metered rates, and many continued to charge even higher fixed fares whenever they get the chance.

However, honest cabbies deserve our support. Passengers who normally use Grab or Uber should occasionally use a taxi app or street hailing for a cab.

Since inception, SPAD has not issued any permit to taxi companies. After the Taxi Industry Transformation Programme was unveiled in August last year, taxi permits were issued to deserving individuals and some qualified for RM5,000 grants to purchase new taxis.

With the passing of the Land Public Transport (Amendment) Bill 2017 and the Commercial Vehicles Licencing Board Act (Amendment) Bill 2017 in the Dewan Rakyat last July, companies providing e-haling services are required to obtain an intermediation business licence from SPAD.

While Uber and Grab are certain of applying for this new licence, it remains to be seen how many of the existing taxi app operators, numbering around 20, would apply, as there are too many for a small market.

But there is no stopping for any one of them to emulate what MyTeksi had done earlier by adding private cars. If so, Uber and Grab would no longer enjoy a duopoly, as they could easily collude.

The common saying “Two is company, three is a crowd” certainly holds true. Just like telcos, there is room for three major e-hailing operators to ensure healthy competition for the benefit of consumers.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.

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