Cab drivers, “landlords” the problem, not a lack of surge pricing

Mar 06, 2017 06.00PM |
 

by Oo Gin Lee

TAXI companies need to understand why users like me who spend about $500-$600 a month on cabs and rides are choosing Uber over taxis. Unless I am in a hurry, I will actually call for an Uber even if I am standing at a cab stand filled with empty cabs.

The biggest problem with cabs are the cab drivers. Many, though not all, are jaded and have bad attitudes. The crux of the problem is that these drivers do not see themselves as service providers which is why they come up with shenanigans like the “changing shift” excuse. Often, “changing shift” is a cover for them to choose the passengers that fits their plans – financially or otherwise. I don’t use Grab either because Grab drivers have the ability to choose passengers – passenger destinations are shown to Grab drivers before they make the pickup.

Uber drivers, on the other hand, do not get to choose their passengers. They only know where their passengers are going after they have picked up the passenger and started the journey.

The Uber system also means that passengers are always able to get a Uber confirmation within seconds, because the booking system does not need to wait for the drivers to make a decision about the rider’s destination. From my experience, when I get a booking with Comfort cab app, the cab arrives in under five minutes. Uber casts the radius wider, so sometimes I have to wait 10 to 15 minutes before the ride arrives. Many Uber drivers are also inexperienced, adding to the late minutes.

Despite this, I still choose Uber because you always get a booking confirmation the fastest (even if it means you still have to wait another 10-15 mins for the car to arrive). The beauty of booking apps is that you can see where the car is and how long more it will take before it reaches you, so you can maximise your time by doing other stuff while waiting for the ride to arrive.

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The second biggest problem with the taxi business is that the taxi companies act like landlords. Their revenue comes from car rental, which leads to the creation of the two-shift system, where the fairest time to change shift is between 3-5pm. This leads to a shortage of taxis during peak hours, the weakness of the system that private ride companies like Uber and Grab have exploited to the fullest. Ride companies on the other hand, earn by making 10-30 per cent cut of the cost of ride. The difference in the business model explains why you can always get Uber during peak hours. Uber incentivises its drivers to get onto the road during peak hours while taxi drivers are busy putting up their change shift signs and making mental calculations whether the next destination is en route to their handover location.

The third problem is that cabs cost more. Though this isn’t the main reason for me to choose Uber over cabs, I am confident that it is one of the main reasons that even aunties and uncles are choosing to book a ride through Uber and Grab.

So the recent news that the cab companies now want to introduce surge pricing befuddles me. This will drive up revenue for the cab drivers but it won’t solve the three problems why cabs are losing out to Uber. In fact, it will only make it worse. The potential for a more expensive ride does nothing to weed out bad service, and simply makes bad experiences even more unpalatable to customers.

The other problems still remain – customers trying to avoid bad drivers, and cab companies are acting like landlords and not as service providers. And like before, they think they can solve the problem by increasing the “potential revenue” for their drivers, just like when they increased flag-down rates, and introduced new surcharges.

Perhaps in the old days when we didn’t have a choice but to take cabs, this tactic may have worked well enough. But in an age where everybody can be a Uber or Grab driver, or call a car on demand, and at a time when we are hearing stories of cab drivers returning their taxis in droves, this latest initiative to add surge pricing, without first addressing other problems, is surely a recipe for disaster.

 

Oo Gin Lee was a tech journalist for over 15 years before he left The Straits Times in mid-2015 to start his own PR agency that focuses on consumer tech.

 

Featured image by Najeer Yusof.

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