ADDED COMPETITION COULD KEEP TAXI OPERATORS ON THEIR TOES
Associate Professor Walter Theseira from the Singapore University of Social Sciences highlighted that unlike a pure taxi fleet operator, GrabCab has the opportunity to leverage the larger Grab platform to create incentives for taxi drivers to join the company.
For example, this could come in the form of renting out a taxi to the driver at a lower rate, with the condition that drivers provide “a certain amount of service on the platform”.
“Or (Grab) could rent (to drivers) at the standard rate, but could rebate the rental progressively, depending on the more service that you provided on the platform,” he added.
“These are strategies that a combined fleet operator and platform can do, but a pure (taxi) fleet operator cannot,” he said.
He added that for a start, to grow the number of drivers on GrabCab, the company will encourage private hire drivers on its platform to switch over to become taxi drivers on GrabCab, while also urging taxi drivers from other operators to make the switch as well.
“The combination of these things will probably reduce the demand for the other taxi operators, and they’ll start to see their rental utilisation fall,” he said.
“And then, if they cannot compete … they’ll probably have to let their taxi fleet numbers decline.”
Transport analyst Terence Fan added that Grab also has the technical know-how to attract more customers to its product.
“While it is not necessarily the case that Grab would have to lower taxi fares to entice commuters to its taxis, Grab (does) have a history of using promotional codes in abundance in its early days to acquire new users,” said Asst Prof Fan, who is from the Singapore Management University.
He added that it has the existing IT infrastructure to generate these customer incentives in a “relatively cost-effective way”.
Agreeing, Assoc Prof Ong, who is the deputy head of research and enterprise at the NUS Department of Civil and Environmental Engineering, said that the above conditions will create pressure on the existing taxi companies.
“I believe that most of the taxi operators today, their drivers are heavily relying on Grab’s app to get their customers,” he said.
“I think we will need to take a look at how Grab is going to provide the salaries and benefits for the taxi drivers in this new setup.”
In response to a CNA query on whether the standard taxi option currently available on the Grab app will be phased out, Grab said that it was “committed to maintaining an open platform” accessible to all taxi and private hire vehicle drivers.
It will also share more details on GrabCab at a later date.
Responding to queries from CNA, ComfortDelGro, which operates both the Comfort and CityCab taxi fleets, said: “We are confident in our ability to continue serving our long-time drivers and customers effectively, given our extensive experience in fleet management, established infrastructure, and large vehicle fleet.
It added that competition is “a natural part of the market dynamics”, and that it will continue to build up its ecosystem, driver benefits, and adapt its strategies as necessary to “ensure we remain a leading provider of taxi services in Singapore”.
“As Singapore’s largest taxi operator, ComfortDelGro has served Singaporeans for decades, building a strong and reliable taxi network, and remains committed to providing safe and high-quality rides.”
