Private booking apps vs regular taxis: What's the issue?

Private booking apps vs regular taxis: What's the issue?

Private car booking services such as UberX and GrabCar are set to undergo a review following feedback from traditional cabbies calling for a level playing field. Channel NewsAsia explores the issue.

SINGAPORE: Workers trying and often failing to get a taxi – this is a common sight around Singapore during peak hours and it is where private car booking services such as UberX and GrabCar say they come in.

Mr Lim Kell Jay, GrabTaxi’s general manager for Southeast Asia, said: "The GrabCar service is really meant to complement our existing taxi service, especially during peak hours, when there's more than enough demand to go around to both taxis and GrabCar drivers.”


Some commuters said that time spent getting a ride is what matters most. "I will choose the app that can secure me the cab the quickest way,” said one of them, Ms Jennifer Heng. "Certain apps just don’t – they go searching a lot, but they don’t give you a cab."

Another regular taxi user, Mr Rob Philips, said: "(What’s important is) whether or not you can get a taxi, but yes, the speediness of the taxi arriving, whether he can find the place and whether you can pay with a credit card are also factors."

However, there are also concerns over the safety of private car booking services. Mr Philips said: "I don't know who the driver is and how well he knows the roads. Is he insured? Is his car working properly?”

An online poll of nearly 2,000 people in Singapore by YouGov, a market research agency, found that while most do not necessarily prefer booking a private ride, more than half valued cost and availability. Slightly more than half also believe legislation is necessary for the private car booking industry.

"Commuters at the end of the day, they only want a service that is efficient, safe and cheap, basically,” said Mr Walter Theseira, an economist with the SIM University. “Whether they get that service from traditional taxis or private car sharing apps, I don't think consumers really care.

“But at the same time, I think consumers don't care about these issues until a problem comes up. Let's suppose you feel like you've been cheated by your driver, let's suppose that, for example, there's some criminal intent by the driver towards you, then who do you go to for recourse?"

There had also been concerns over insurance coverage in the event of an accident. UberX and GrabCar have since clarified that their drivers must have a commercial vehicle policy to protect themselves and their passengers.

"In a private car policy, usually the use of the vehicle is limited to social, domestic, and pleasure only,” said Mr Derek Teo, executive director at the General Insurance Association. “In other words, it cannot be used for business.

“Therefore, if the vehicle is used other than social, domestic, pleasure, should there be an accident arising, you'll find that compensation for damages and injuries could be a challenge, because the policyholder has breached policy conditions, in not adhering to the terms on the limitations of use."

But the criteria for drivers of both services are not all that different. Requirements include having a Class 3 or 3A licence, and a clean driving record. The main difference is in a taxi driver's vocational licence.

According to the Land Transport Authority, potential taxi drivers must be at least 30 years old, be a Singaporean, have a valid Class 3 or 3A licence with a clean record of at least a year, speak and read basic English and pass a medical exam.

As for private car booking services, applicants must be at least 25, be a Singaporean or permanent resident, have a valid Class 3 or Class 3A licence with at least two years driving experience, have no criminal record or history of serious vehicle offences, clear relevant medical exams and pass a vehicle inspection. They must also have a company registered under their name, to qualify for a commercial vehicle insurance policy.

To get a licence, they must pass a course, which includes modules such as road safety and route planning. It costs S$335 before GST and takes 60 hours to complete, whether done full-time or part-time. That is one of the reasons cabbies say the playing field is uneven. Other reasons include lower overhead costs incurred by private drivers.

One taxi driver told Channel NewsAsia: "We go for the course, we take the exam, we take the vocational licence. Another person just goes and drives without licence, everybody knows which is fair and which is unfair.”

"Rental cars are much cheaper, so the cost overhead is lower,” said another driver, who added that drivers with private car sharing apps “work less for the same amount”.

Yet another complained about their competitors’ quick response, saying that this has caused him to lose “about 20 per cent of business”.


Industry players have said that standard licensing of all drivers-for-profit is a possibility. The question is, how far would the authorities go?

"We have to be very careful with this, because basically, why would we want to kill the golden goose?” said Mr Theseira. “If this is good for the economy, why would we want to kill it? We just have to look at how we can make it better for everybody.

“The cure may not necessarily be adding a lot of regulation to private car sharing apps, but instead it could be to reduce the burden of regulation on standard taxi drivers. I think we need to take quite a broad and balanced approach."

The arrival of private car booking services has also had another effect - taxi driver attrition. Uber claims that up to 30 per cent of its private car drivers are former cabbies. While Grab did not reveal its figures, it said a substantial number previously drove taxis. This could prompt traditional taxi operators to rethink their business models to stay competitive.

Said Mr Theseira: "They could consider some form of profit sharing with the drivers, or they could even consider employing drivers directly and paying them a fixed salary, but on the condition that they work a certain number of hours, pick up a certain number of fares, for example. So these are a different innovations that could be considered."

uber driver
File photo of a private hire car driver. (Photo: Sherlyn Goh)

Private car booking services believe there is space in the market for both them and traditional taxi operators to thrive. For starters, they do not compete for street hires, nor clog taxi queues. In fact, Uber points to the big picture - one of a car-lite city - that has also been painted by the Government.

"Wherever I am in the city, sometimes I'm going to need a service like UberX, sometimes I'm going to need a service like taxis, and sometimes I'm going to need a service like the MRT,” said Mr Chan Park, Uber’s general manager for Southeast Asia.

He added: “If this existing public transit infrastructure and UberX can complement each other, which I believe we do, then we can dream of a world where car ownership decreases, and more and more people are getting rid of their cars because it just doesn't make sense to own a car in the city, especially when you take into account the maintenance costs and the depreciation of the COE.”

In some cases in other countries, regulation and indeed, formal recognition of such services, has not been such a bad thing. "In the Philippines, for the first time, the government there was able to pass a piece of legislation at the national level, that recognises ride sharing as a formal industry,” said Mr Chan Park. "So there's a licencing process and a recognition of this space as an industry.

"What we have seen is since then - and this was about half a year ago - the growth of that business and the evangelism of this product, not just for us but our competitors as well, has been booming. The growth that we have seen in our Manila business and in our Philippine business, has been very encouraging and I hope that the next step here that we take in Singapore will be very similar."

So what is in store for the future of private car booking services? A hint may be found in Transport Minister Khaw Boon Wan's blog. He said while industry regulations must always be fair, Singapore must "keep an open mind" to new innovations and business models.

Source: CNA/hs