Concrete measures needed for healthy taxi industry
The authorities must ensure the number of taxis do not fall below a critical mass to prevent surge pricing by transportation network companies.
By CY Ming
Transport Minister Liow Tiong Lai wrote a 1,027-word article that both e-hailing and taxi services can co-exist.
The article is a good indicator of how the highest levels of our government perceive our taxi industry.
Reference to the Taxi Industry Transformation Plan (TITP) was made no less than 12 times, giving the impression that the TITP would be the panacea for the taxi industry.
Do taxi companies and drivers share the same view?
Although large numbers of taxi permits were granted to individuals, more were issued to companies, allowing those who could not obtain permits or bank loans to source their taxis from these companies.
These companies were wrongly referred to as taxi operators instead of financiers, charging high interests commensurate with the risks they undertook.
For example, when the Proton Exora was launched, some drivers switched to this MPV model, which cost more than other Proton cars, hoping to get more airport trips, although the metered rates were the same.
But after the engine valves kept burning from the high heat of combusting natural gas, drivers dumped their vehicles at taxi companies and walked away. It was the same after a taxi became a total wreck in an accident, as almost all taxis were insured for third party only.
These drivers not only lost their down payments but a few months instalments as well, with the rest borne by taxi companies, which seldom institute bankruptcy proceedings against drivers, unlike banks.
It is true that most taxi companies make no attempt to train their drivers. Perhaps they know it would be futile, knowing taxi drivers.
I must say I agree, which may come as a shock to many, considering so many articles and letters have been written calling for better trained drivers.
Most people do not realise it is much easier to train someone than expect honesty. If it was that easy, none of our well-trained enforcement officers would be corrupt.
If we concede there are some corrupt uniformed officers, why are we expecting all taxi drivers to be honest?
In fact, an ordinary person would succumb to cheating or stealing if convinced he or she could get away with something irresistible. As such, anyone that is not monitored must be of high integrity and strong discipline to remain honest, but their numbers are few.
Before the advent of e-hailing apps, the best behaved group of taxi drivers were those picking up passengers using trunk radios operated by radio taxi companies.
Before Uber was introduced to this country in 2014, Sunlight Taxi had already introduced Unicablink a year earlier. Unicablink is an app allowing passengers to book a taxi using smartphones.
Even before that, MyTeksi, another local taxi app was launched in 2012 and expanded into ride-hailing when Uber came into the Malaysian market. It is now known as Grab, and users can choose between private vehicles or taxis.
Today, there are a dozen taxi apps in the local market and drivers are monitored as closely as Grab or Uber. But they are getting fewer passengers. Why?
It has nothing to do with service. Anyone using a smartphone is much more likely to opt for a cheaper ride-hailing vehicle than a taxi.
The business model of transportation network companies (TNC) is totally different from the traditional taxi business.
On the average globally, Uber passengers pay only 42% of the actual fare, causing this TNCs to lose US$3 billion last year. Its valuation was stuck at US$68 billion for many months after a meteoric rise from just US$60 million in 2010, or 1,133 times more.
Uber has been marred by a series of controversies recently and if it does not implode, investors will make a handsome profit from a hugely successful initial public offering.
But TNCs are known for surge pricing, which will continue to rise as the number of taxis drop. As such, it is necessary for the authorities to ensure the number of taxis do not fall below a critical mass.
Offering a general view and painting a picture that the taxi industry is not innovative is not true and of no help to anyone.
CY Ming is an FMT reader.
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