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Is Uber the antidote for toxic taxi service?

POSTED BY CBT Team ON 02 September 2014

Uber

On Aug 27, the Land Public Transport Commission (SPAD) pronounced that private cars and vehicles licensed under Hire & Drive (H&D) are not allowed to provide taxi or limousine services.

Malaysians are not surprised that pirate taxis, also known as ‘prebet sapu’, are illegal but it was a shock to car rental companies using H&D vehicles for chauffeur driven services.

More than ten years ago, the Tourism Ministry had allowed self-drive vehicles to be used for chauffeur-drive when it took over the licensing of H&D, with the Commercial Vehicle Licensing Board retaining control of limousine taxi permits.

Currently, there are 839 luxury cars licensed as limousine taxis, and 11,402 H&D vehicles in a recent report.

If only 15% of H&D vehicles are used for chauffeur-drive, they would outnumber limousine taxis two to one.

As such, SPAD should allow for the conversion of H&D licences to limousine taxis before enforcing strictly on the segregation of self-drive and chauffeur-drive vehicles.

As for the public, it is understandable that many were riled up upon learning that the taxi service using private cars through Uber had been declared illegal.

Over the past decades, there had been too many horrific experiences with metered taxi drivers and reports on their antics.

Against this backdrop, Uber was welcomed like a messiah. Those advocating for transformation of the taxi industry or championing a free market were particularly vocal.

With deep pockets and aggressive strategy, Uber could penetrate any new market swiftly. It would be the death knell of traditional taxi operators and drivers if left unchecked.

Local taxi companies had never experienced a greater shock than this but sadly, it has not gotten them to transform the way they do business, and perhaps they never will.

They are only eager to rent out their vehicles and permits for several years under a rental-purchase scheme, using daily rates for easy calculation.

Taxi companies treat drivers as customers and are left to their own devices as long as they do not default in payments.

It is normal that companies do not conduct character checks on their customers, provide them training or monitor the way they do business, and local taxi operators are no exception.

But in Indonesia, Blue Bird taxis are preferred as officers from this company are out on the streets every day to ensure their drivers toe the line.
In contrast, the well-known president of a local taxi association retorted that it is SPAD’s job to monitor drivers when I suggested that taxi concessionaires should be more responsible.

Although SPAD is holding taxi companies accountable for offences committed by the drivers through the Operator Licence, they are still not training and monitoring their drivers.

Perhaps they already knew that it would be an exercise in futility as no more than a quarter of the cabbies are trainable, or could meet the expectation of local and foreign passengers.

From such a low base, good taxi service would be hard to come by and industry transformation would take a long time.

On the other hand, drivers wishing to drive for Uber would have to answer some challenging questions, such as the difference between Uber and taxi services, 4-star and 5-star drivers, and why would passengers request their service again.

As such, it is no surprise that Uber drivers provide a much higher level of service than taxis as they aim to delight customers while most cabbies take passengers for granted.

The fact that there is no passenger liability cover in private cars is least important as one has to sue for compensation, which cost money and time with no certainty of getting paid.

Also, concerned passengers are already adequately covered by their own life and personal accident insurance.

Although private cars do not undergo inspections at Puspakom, they are safer than old taxis. It is better to travel in safer vehicles without insurance than one that is insured but unsafe.

However, embracing Uber as godsend is as good as signing the Trans-Pacific Partnership Agreement without negotiation.

Those who accept Uber at face value should examine their modus operandi. They have been entering new territories like mercenaries and see what the city would do to stop them later.

Such incursions showed they have no respect for the authorities or concern for the livelihood of existing cabbies.

With deep pockets, they could easily buy out existing taxi operators but prefer to get rid of them by offering cut-throat prices to attract customers in droves.

For example, promotional rates for the premier UberBLACK service using Toyota Camry or Nissan Teana are RM3 starting fare, RM21 per hour and RM1.15 per km.

In comparison, the regulated meter fares for executive taxis using Toyota Innova or Nissan Serena are RM6, RM34 and RM2 respectively.

The UberX service using Nissan Almera and Honda City was recently introduced with a RM1.50 starting fare, RM12 per hour and 55 sen per km, while budget taxi fares are RM3, RM17 and 87 sen respectively.

Taxi fare increase is already overdue as the last was made in August 2009. A rate fair to both drivers and passengers would be RM24 per hour and RM1.25 per km, especially when all new metered taxis will be using the Proton Exora and no longer the cheap Saga.

Still, the Exora taxi is much cheaper than the Almera and City because metered taxis enjoy excise duty exemption. Likewise, the Innova and Serena taxis are very cheap compared to the privately registered Camry and Teana.

If excise duties are withdrawn from metered taxis, operators would close shop. It would be suicidal for them to pay private car prices to compete in the market.

As such, it is clear that Uber is heavily subsidising the ultra-low fares to corner the market swiftly and would raise them just as fast when customers are dependent on their service.

If they can be ruthless with existing cabbies and their dependent families, they are unlikely to remain benevolent to customers after wiping out the competition.

It is a matter of time before other phone apps would also be able to provide the facilities offered by Uber, such as card payment and fare calculation to cross check with the taximeter.

If phone apps are syphoning off 20% of the fares as Uber does in other countries, their rates for budget taxi service should be RM30 per hour and RM1.60 per km, allowing the driver to retain RM24 and EM1.28 per km respectively.

Passengers who book taxis using phone apps and pay by credit cards are more interested in good service than ridiculously low fares.

Also, we ought to bear in mind that we should always pay reasonably for services, just as we wish to be reasonably paid for our work or salary.

Allowing private cars to provide taxi service would result in a free-for-all. It has been a free market as phone apps were allowed to operate and had captured most of the market share from traditional radio taxi companies.

Any company that can match Uber’s technology and drivers’ recruitment would emerge as the market leader by charging fares that are reasonable to both drivers and passengers.

However, the authorities should only endorse businesses that had taken steps to comply with local laws and pay local taxes.

If Uber were to continue operating in Malaysia as it does everywhere, it will bring chaos and disharmony to the local taxi industry.

There would be ugly scenes when private cars are confiscated by the authorities and irate cabbies taking the law into their own hands, putting the safety of drivers and passengers at risk.

Where education and enforcement had failed to check errant cabbies, technology has finally overtaken them.

The impending announcement of new taxi fares by SPAD will be followed by the rolling out of the Centralised Taxi Service System (CTSS), which would allow passengers not using phone apps to call just one phone number for access to all radio taxis.

While taxi companies refused to monitor their drivers, SPAD would be using the CTSS to ensure cabbies are in their best behaviour.

Over the next few years, other taxi phone apps including our home-grown MyTeksi and Unicablink, would be providing Uber-like services using new Proton Exora taxis.

Our taxi industry is undergoing transformation and Uber is just a catalyst, not the antidote or silver bullet that can fix an industry overnight.

YS Chan
Kuala Lumpur

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