Taxi industry should get creative or be driven out of business

It has become increasingly clear that Singapore's taxi operators must adapt or risk being driven out of business by the advent of ride-hailing services ("Simplify fares, ensure more cabs during peak hours" by Mr Peter Loon Seng Chee; Jan 16).

Despite the substantial advantages that players like Uber and Grab enjoy - for instance, their lower cost base and tech-integrated business model - it is still possible for taxi companies to find a competitive edge in terms of outright service quality.

One key factor to consider is fare structures.

Part of the appeal of Uber and Grab lies in their relatively straightforward pricing model; the mobile app displays the total cost of the trip even before the vehicle has arrived, complete with a breakdown of charges.

In contrast, it is difficult for passengers to visualise the progression of a fare meter.

More than that, fares are subject to various additional surcharges that vary considerably based on location and time.

Despite the substantial advantages that players like Uber and Grab enjoy... it is still possible for taxi companies to find a competitive edge in terms of outright service quality.

This very often results in confusion and dissatisfaction on the part of passengers, and may fuel the perception that cab rides are more expensive than they actually are.

Overhauling the fare system by simplifying the cryptic regime of surcharges, as well as providing advance cost estimates when booking trips, would help boost the appeal of taxis relative to private-hire options.

On the issue of ensuring cab availability during periods of heightened demand, the Land Transport Authority should consider liberalising the taxi industry.

Removing minimum fleet-size requirements would permit the entry of multiple new, smaller players, ensuring more vehicles on the road for passengers to flag down, and creating more incentive to compete instead of stagnate.

Other bold measures are worth contemplating seriously.

Waiving Electronic Road Pricing charges for registered taxis, for instance, would stimulate vehicle circulation during peak hours.

Adjusting the fare and booking system to encourage having multiple passengers, akin to carpooling, would boost efficiency.

In the face of tough market conditions, taxi operators should not cave in to pessimism, but instead get creative, so as to serve customers better.

Paul Chan Poh Hoi

A version of this article appeared in the print edition of The Straits Times on January 23, 2017, with the headline 'Taxi industry should get creative or be driven out of business'. Print Edition | Subscribe