Grab-Uber price war: What should the NTA do?

by Daniel Yap

COMMUTERS are happy – private-hire car prices are down by about 15 per cent in the latest struggle for market share by Grab and Uber. National Taxi Association (NTA) Executive Advisor Ang Hin Kee warned, however, that a price war would hurt everyone, in words reminiscent of what Singtel CEO Chua Sock Koong said earlier this year when she spoke out against having a fourth telco to compete with the incumbents.

Ms Chua’s words were not well received by the public and, oddly, Singtel, StarHub, and M1 soon engaged in a round of the aforementioned price warring that was supposedly not good for anyone. Taxis and private-hire cars are a somewhat different matter though. There is a layer of people in between the companies and commuters – the drivers.

Mr Ang is right to say that a price war will hurt the drivers he represents. Without enough collective clout to compel taxi operators and private-hire car apps like Grab and Uber to preserve driver earnings, taxi drivers are too exposed to the effects of corporate wars.

But there was also an odd word of warning from Mr Ang: “When they (private-hire car companies) have the market share later on, they could exercise the right to earn profits.”

That’s strange. Didn’t Mr Ang just warn against slashing fares? Why now warn against raising profits (presumably by raising fares)? Or does Mr Ang think that private-hire car apps intend to make profits without raising fares – by taking it out of drivers’ pockets?

He asked: “What checks and balances do we have to ensure that both commuters and drivers are not taken advantage of?”

Commuters vote with their wallets when options become available, as they have been doing by choosing Grab and Uber over ComfortDelGro or Trans-Cab. As long as there is fair and open competition, commuters will be pretty safe. This is why Grab and Uber are being cheered – they are breaking the stranglehold that ComfortDelGro (which controls more than 62 per cent of the taxis in Singapore) has on the market. It sounds strange that Mr Ang seems to be speaking against letting Grab and Uber build market share, but is advocating for taxi companies to retain said dominant market share.

What about drivers? So if life as a taxi driver is really teruk, then switch over to driving private-hire car lor! There are nearly no barriers to entry for a taxi driver who wants to make the switch (other than maybe a fixed-term contract for taxi rental). A problem arises for private-hire car drivers – it is not easy for them to become taxi drivers. Perhaps this should be made easier.

Mr Ang, if he is advocating for taxi drivers as head of the NTA, should be asking for better deals and better treatment of drivers, pushing for better standards and helping drivers transition smoothly from taxi to private-hire car, should the need arise. Advocating for only one side of the taxi vs private-hire car showdown is probably not in the long-term interests of taxi drivers.

The playing field isn’t level – the NTA needs to push for faster legislative reform to bring taxis and private-hire cars into a more unified framework, preferably by cutting out antiquated taxi compliance and legislation to make the trade nimbler rather than by adding compliance burdens to private-hire cars. This is already starting to happen.

The NTA needs to encourage taxi drivers to walk away from unfair terms or from companies (taxi or private-hire car) who are willing to slash driver earnings to gain market share. He needs to work to expand the ambit of NTA to represent private-hire car drivers as well – the skill sets and labour pools of these two groups overlap greatly.

The NTA needs to ensure that drivers see a fair share of profit growth for the companies they work for. ComfortDelGro’s taxi business posted 8.6 per cent profit growth from 2014 to 2015. SMRT (Trans-Cab, the second largest taxi fleet, does not publish its annual report) reported 42.6 per cent profit growth for their taxi operations in the same period. Both companies have reported steady profit growth for years.

The best way to advocate for the interests of taxi drivers will be to include Grab and Uber drivers as well. That’s the way the market has turned, and associations like NTA need to keep up or risk losing their bargaining power.

 

Featured Image by Natassya Diana.

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The post Grab-Uber price war: What should the NTA do? appeared first on The Middle Ground.

- Daniel Yap