Fare cuts by Uber, Grab will hurt sector: Taxi body

Strategy unhealthy and unsustainable, and 'price war' will hit private-hire car drivers and cabbies alike, says NTA
By Adrian Lim, The Sunday Times, 24 Apr 2016

The National Taxi Association (NTA) has criticised the recent price cuts by Grab and Uber, saying they not only hit their drivers' earnings but, if left unchecked, could also hurt the taxi industry and, ultimately, commuters.

"It's an unhealthy and unsustainable business strategy," said NTA executive adviser Ang Hin Kee.

On April 14, Uber cut fares for its UberX private chauffeur service by an average of 15 per cent. Four days later, Grab slashed its GrabCar prices by up to 14 per cent, with minimum fares falling from $8 to $4.

Cab firms, which had fares comparable to those of UberX and GrabCar before, are now under pressure, Mr Ang told The Sunday Times. But a "price war" would mean both private-hire car drivers and cabbies having to do more trips and driving longer to earn the same amount.

"We don't want to go down this road," he said.

Mr Ang, who is also an MP for Ang Mo Kio GRC, pointed out how both app companies were still taking their 20 per cent cut from their drivers, despite having shaved fares.

The worry is that if private-hire car firms end up dominating the market, they can then start raising prices, and charge a premium.

"The new players will (first) offer a lot of goodies... But when they have the market share later on, they could exercise the right to earn profits," said Mr Ang. "What checks and balances do we have to ensure that both commuters and drivers are not taken advantage of?"

Earlier this month, the Government said that by the first half of next year, Uber and GrabCar drivers must be licensed and undergo background and medical checks, and also have to register their cars.



Mr Ang said that while the taxi industry welcomes competition, the playing field is not level, given that cab operators must factor in "compliance costs". These include the bulk of cabbies having to meet certain standards set by the Land Transport Authority, such as covering 250km each day and being on the road during peak hours. Fleets also have to be serviced regularly.

"Cab firms hire teams of people to manage this, and these costs are passed down to the taxi drivers through their rentals," said Mr Ang.

While these yardsticks benefit the public, he believes similar standards should be imposed on the private-hire car business. Alternatively, have these requirements lifted from taxi firms, he suggested.

Head of Grab Singapore Lim Kell Jay said the fare cuts have led to a "tremendous growth" in passenger demand. This means drivers are getting more bookings over the same length of time, and bringing home "comparative incomes". He added that its part-timers and full-timers make a gross average of $30 an hour.

Asked about its drivers' earnings after the fare cuts, Uber said it would share details later.

Some private-hire car drivers told The Sunday Times that their earnings have been hit by around 20 per cent since the price cuts.

Dr Walter Theseira, an economist at SIM University, said traditional cab operators have a key advantage - they are the only ones allowed to get flagdowns. Still, they face a tough battle. He said: "App companies are willing to lose some money now to gain market share, but the incumbents wouldn't want to do this after being profitable for so long."

Don't blame taxi apps for meeting commuter needs

I read Sunday's report ("Fare cuts by Uber, Grab will hurt sector: Taxi body") with incredulity and dismay.

It is unfair for the National Taxi Association (NTA) to criticise Grab and Uber's creative business strategies when some of the taxi body's members' bad behaviour is the source of the problem to begin with.

Time and again, commuters have complained about the unavailability of taxis without any clear response from the NTA to address the issue.

The Land Transport Authority (LTA) had to step in to introduce city area and other surcharges to entice taxi drivers to stay on the streets.

Now, a commuter booking a taxi in the Central Business District in the evening could be paying close to $10 without the taxi having moved an inch - three times the regular flagdown fare.

Still, these measures did not improve the availability of taxis, and the LTA subsequently imposed a 250km daily coverage requirement.

These reactive measures would have been unnecessary if taxi drivers were meeting commuters' needs in the first place.

Even today, the bad behaviour persists - choosing customers by destination, zooming by taxi queues or hiding in carparks to wait for bookings to come in, not accepting electronic payment and disappearing before the surcharges kick in.

What has the NTA done to change taxi drivers' mindsets?

A taxi driver's profession is a service job, and the rules have changed with technology and customer expectations.

If taxi drivers aren't willing to adapt, commuters will readily find alternative service providers who meet their needs, regardless of price.

Taxi drivers, too, have the option of joining third-party taxi app firms.

One cannot blame entrepreneurship for solving customers' problems, and most certainly, one cannot ask to be saved from a fire while fanning the embers.

Gurmit Singh Kullar
ST Forum, 26 Apr 2016

Work together to benefit cab drivers, passengers

In every trade, there are bound to be some black sheep ("Don't blame taxi apps for meeting commuter needs" by Mr Gurmit Singh Kullar; April 26). Let us not tar the whole taxi industry with the same brush.

Many taxi drivers welcome competition, as it is good for both taxi drivers and consumers alike. But it must be fair and on a level playing field.

However, in the case of private-hire car operators, they have a much lower entry barrier, as they do not carry the heavy compliance cost of needing to meet the minimum daily mileage of 250km and plying during morning and evening peak periods.

National Taxi Association executive adviser Ang Hin Kee talked about the high compliance required of taxi operators ("Fare cuts by Uber, Grab will hurt sector: Taxi body"; April 24). For instance, taxis have to be sent for monthly servicing and maintenance and six-monthly vehicle inspection.

As a result, on average, the rental cost of a taxi is 70 per cent to 80 per cent higher than that of a private-hire car.

For the safety of passengers, it is prudent that all cars used for private hire on a prolonged and frequent basis be subject to the same requirements taxis face.

Many taxi drivers do embrace new technology and are already using third-party taxi booking apps.

It is not the new taxi apps that are the problem, but the unfair competition and uneven playing field private-hire cars have over taxis.

Let us not point fingers. Instead, we should collectively work together for the benefit of commuters and drivers alike, so that passengers can enjoy their ride and drivers can earn a decent income.

Make the playing field level for all to compete in a true meritocracy.

John Leong Yew Cheong
ST Forum, 5 May 2016

Cabbies talk of love-hate relationship with Grab and Uber
By Ng Keng Gene and Alexis Ong, The Sunday Times, 24 Apr 2016

Ask any taxi driver where he takes a break, and he is likely to mention 115 Bukit Merah View hawker centre. And the cabby haunt is also the perfect location for Grab staff to peddle their vehicle booking app.

Many taxi drivers have told The Sunday Times of a love-hate relationship with Grab and its rival Uber. Some, especially the younger ones, use the app to supplement their company's bookings but feel threatened by the onslaught of private-hire car services that the companies have added to the market.

"There has been a drop in bookings by up to 30 per cent on our company's systems," said Mr Dan Lim, 59, who has been driving a taxi for five years. "I have no choice but to use the app to get bookings."

Mr Ken Ng, 45, who has also been driving a cab for five years, said: "Technology has changed so we have no choice but to change with it. Let's be honest, I'm making more because of these apps."

Apart from the benefits brought about by the taxi booking apps, Grab and Uber have added an unwanted dimension to the market that taxi drivers now have to deal with - private-hire car services.

Despite new rules announced in Parliament to regulate such drivers, the disparity between the standards required to get a Private Hire Driver's Vocational Licence and a Taxi Driver's Vocational Licence has angered drivers.

By the first half of next year, GrabCar and Uber drivers will have to attend and pass a 10-hour course, compared with a new 25-hour course for taxi drivers. But that is not the only factor upsetting cabbies.

Mr Khoo, 54, a cabby of five years who, like some others, did not give his full name, said the minimum age of 30 years should be imposed on GrabCar and Uber drivers too, adding: "Twenty-one years is definitely too young."

Taxi drivers say they have seen losses since GrabCar and Uber entered the market in 2014 and 2013, respectively, with some having to work harder to make ends meet.

One of those hit is Mr Singh, 59, who has been driving for about six years. "I used to earn about $36,000 annually but that has dropped to about $29,000. It goes without saying that the entrance of private-hire car drivers has affected us," he said.

Another cabby, Mr Goh - who has a wife and two children - said it is a stretch to maintain his salary as the sole breadwinner. The 56-year- old, a cabby of 10 years, said: "I drive an extra one or two hours a day on top of my usual shift to make up for the decrease in customers."

However, a handful feel the introduction of GrabCar and Uber has not taken a toll on their business.

Mr Tan Chong Sing, 52, said: "I haven't really been impacted, as our advantage over private-hire car services is that we can still pick up passengers by flagdowns and at taxi stands, so we still have a steady customer flow. Relying on my company's booking system is enough to keep me busy."

Mr Ong, 57, who has been driving for eight years, admitted the introduction of Uber and GrabCar has had some positive impact: For example, his company has been more lenient on drivers like him.

"In the past, if there was a complaint against us, they would terminate (our services) straight away," he said in Mandarin. "Now, they're more relaxed - they'll give a warning because they know we can just go and drive somewhere else."

Many cabbies are weighing up their options now that they have more avenues to ply their trade.

Mr Tan, who is in his 50s, said: "I will consider driving a private-hire car, but not at the moment as I think things are still unstable. Perhaps I can think about it again when the new rules kick in." However, others feel they cannot get used to the new systems that Grab and Uber offer. "I've been driving (for my company) for so many years," said Mr Khoo.

Mr Tay, 50, scoffed at the thought of having several phones on display, as he knows some Uber and Grab drivers do. He said: "So many screens, how to keep up?"

With the new rules for private- hire car drivers set to be implemented next year, taxi drivers and companies have grudgingly accepted that the scenario has changed.

Mr Tay added: "We used to complain, but what can we do about it after the new rules have been announced? We can only accept them and move on."

Mr Tan, 61, a driver of more than 10 years with ComfortDelGro, said: "The standards need to be as strict (for Uber and GrabCar) as (they are for) taxis... We just want the requirements to be fairer."

Concerns over private-hire car firms driving up COE premiums
By Zhaki Abdullah, The Sunday Times, 24 Apr 2016

Concerns have been raised about private-hire car firms buying large numbers of certificates of entitlement (COEs) recently, even as the Land Transport Authority (LTA) said it will continue to "monitor the situation".

COE premiums for cars have continued to climb recently despite more being available. At the latest bidding, last week, the COE price for cars up to 1,600cc and 130bhp ended 2.8 per cent higher at $47,300. That for cars above 1,600cc or 130bhp finished 5.5 per cent higher at $49,602.

Uber-owned Lion City Rental is believed to have submitted 630 bids, including in the Open category, and succeeded in obtaining 510 COEs - 14 per cent of total successful bids in the three categories. In the previous tender, it secured 270 COEs from 810 bids submitted.

Though most of the approximately 10,000 private-hire cars on the road are older vehicles, in recent months both Uber and Grab have started competing with private car owners for fresh COEs. Pressure on bids may also have come from other private-hire companies such as SMRT's new outfit, Strides.

Mr Lim Biow Chuan, a member of the Government Parliamentary Committee on Transport, said he hoped the Ministry of Transport would come up with more comprehensive rules for private-hire car operators, adding that it would be in the interest of the public as well as existing taxi operators.

"As a car owner myself, I'm concerned about how companies like Uber can impact COE prices," said Mr Lim, who is also Member of Parliament for Mountbatten.

Mr Zaqy Mohamad, who is also on the committee, said it may be time to review the regulations for Category A - for cars up to 1,600cc and 130bhp - and Category B - for cars above 1,600cc or 130bhp - to allow only private individuals to bid. "One person can't fight against a company buying hundreds of cars," said Mr Zaqy, an MP for Chua Chu Kang GRC, adding that firms looking to buy vehicles should be restricted to the Open and commercial categories.

MP for Jurong GRC Ang Wei Neng said the bids by private-hire car services negated the higher supply of COEs and eroded the ability of individuals who may need to buy cars.

The LTA said the availability of private-hire services might reduce the demand for private cars over time. It added that COE premiums are reflective of market supply and demand, and that it would continue to keep an eye on the situation.

Ms Daphne Gan, whose Honda Accord's COE expires next February, is concerned that Uber would drive COE prices up further. "It's not right for them to bid in the private car categories," said the 33-year-old interior designer, who hopes the LTA would remove private-hire cars from the bidding process as it had with taxis in 2012.

Dr Walter Theseira, an economist with SIM University, said that while Uber buying large numbers of cars may raise COE prices in the short term, it was unclear what effect it would have in the long term.

National University of Singapore transport researcher Lee Der Horng supported the call for greater regulation, saying that firms had an unfair advantage over individuals when bidding for COEs.