Has SMRT Found the Solution To Getting More Taxis Back on the Road?

Remember the days when you would hop into a taxi whenever you needed to get somewhere in a hurry or missed the last train home? No? Well, they once existed, just like the dinosaurs.

It’s astonishing how swiftly Singaporeans have switched to using Uber and GrabCar. Cheaper, faster and you’ll never get turned down. What’s not to like?

In fact, the only people this is bad news for are taxi drivers and taxi companies. Many taxi drivers have jumped ship and become Uber or Grab drivers instead.

In fact, of the 100,000 people who currently hold taxi driver vocational licences, 50% are inactive right now. It’s likely that high taxi rental costs have something to do with this.

This is bad news for taxi companies, as the drivers are the people they actually make money off.

Finally giving in to the fact that their business model has to change, SMRT Taxis have come up with a TaxiShare scheme.

Under this scheme, taxi drivers can opt to rent taxis by the hour, picking the vehicles up at designated points and returning them when they’re done. The pick-up points are operational 24/7 for added flexibility.

Vehicles are rented for a block of 3 hours, and rates are between $5.80 to $12.80 per hour. Considering SMRT Taxis’ daily rental rates range from $108 to $125 per day, this is a good deal.

What’s more, in order to lure would-be drivers, they’re offering a promotional rate of $3.80 per hour for their first month.

Now, before you quit your job to “become your own boss”, be aware that the scheme can only be taken up by drivers with a taxi driver vocational licence.

While they’re ostensibly targeting the 50% of taxi licence holders who are currently inactive, if the scheme proves popular we could see more people obtaining the licence in order to rent taxis by the hour.

Is the SMRT TaxiShare scheme going to solve the taxi industries woes? Not likely. Here’s why:

Having more taxis on the road might not increase the demand for flag-down taxis

The TaxiShare scheme aims to convince more drivers to ply the roads, since it offers them flexibility—feeling sick or don’t feel like driving today? Just return the taxi and you don’t lose any money. Only want to work 6 hours a day? No need to worry about having to pay a full day’s rent. It’s thus likely we’ll start seeing more cabs on the road.

It’s true that one of the factors that pushed people to switch to Uber and Grab was the fact that taxis mysteriously vanished from the streets on a rainy day, or at 11:30pm.

But SMRT’s move seems to have come too late. Many Singaporeans who switched to Uber and GrabCar after getting frustrated by taxis aren’t likely to turn back.

After seeing how fast and convenient it is to take Uber or GrabCar and getting used to how the apps work, it is unlikely a surplus of taxis on the road will convince many to go back to taking cabs—especially since Uber and GrabCar are often cheaper.

The scheme does nothing to address the cost of commuting by taxi

The biggest reason most people continue to use car sharing apps is cost.

Let’s face it—Uber and GrabCar are often cheaper than taxis, such as after midnight or when you need to get away from places like Changi Airport or Marina Bay Sands. All the taxis in the world won’t change the fact that you’d still rather book an Uber because it will save you from paying a ton of surcharges.

Furthermore, with the introduction of uberPOOL and GrabHitch, commuters can save even more money by sharing the car with other passengers.

What SMRT’s TaxiShare scheme fails to address is the fact that passengers face a whole host of unnecessary costs and surcharges when they take taxis. The 50% midnight surcharge is one of the heftiest and most annoying, and is what encouraged a huge number to try Uber in the first place.

It seems the only truly effective measure would be for taxi companies to restructure their fees so the price of taking taxis can compete with those of Uber and GrabCar. They’ll then have to make sure it’s still profitable for drivers by offering lower taxi rents. The ones who have to take the hit are, it seems, the taxi companies themselves.

How often do you take taxis as opposed to Uber or GrabCar? Tell us in the comments!

The post Has SMRT Found the Solution To Getting More Taxis Back on the Road? appeared first on the MoneySmart blog.

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