Not toeing the taxi monopoly line

Not toeing the taxi monopoly line

Traditional cab drivers may want to put the brakes on the ride-sharing app revolution, but with the pace of disruption picking up, they can either come along for the trip or fall by the wayside. By Suchit Leesa-Nguansuk

In a constantly changing world, the ability to adapt is the only sustainable competitive advantage, and the taxi industry is learning this lesson the hard way. Taxi drivers are holding onto their reduced market share with sweaty hands as Line Man enters the dynamic race for ride-hailing customers, who are seeking sleeker digital platforms and more convenient ways to book rides.

Tourists call a taxi in front of CentralWorld. SOMCHAI POOMLARD

The Southeast Asian market is perhaps the most competitive in the world. Uber, Grab, All-Thai Taxi and Taxi-Beam all have a stake in the market, but customer bases are hard to keep in this fad- and technology-driven industry.

Asian competitors are holding their ground against international giants. Over the last few months, the market capitalisation of Didi Chuxing and Grab has been larger than Uber's estimated US$50 billion (1.67 trillion baht) valuation.

The taxi industry finds it hard to outprice these new firms, which enjoy lower operating costs and are sometimes willing to forgo profits for five years or more to capture market share. They are also finding it hard to keep up with the products of these tech-centred, engineer-focused firms.

Around the world, taxi drivers have sought to shield their market share through regulatory umbrellas. But regulators are starting to give way. In Thailand, the Department of Land Transportation (DLT) said it supports the rapid change of technology, only requesting that drivers register their vehicles as public transport and obtain public car licences.

Line Man, Line Thailand's food delivery app, is collaborating with Siam Taxi Co-operative in the ride hailing industry.

"Whether or not ride-hailing services are illegal in the country is not the issue. It's time for taxi drivers to improve the quality of their services and catch up with passenger's behaviour," said Vitoon Naewpanit, president of Siam Taxi Co-operative.

Traditional players rely on passengers to hail taxis the old way -- by waving a hand up in the air -- but now they are catching on to the evolving market, as everyone has a smartphone, he said.

"Having taxi booking services is an alternative for passengers," Mr Vitoon said.

The disruptive technology of ride-hailing services coupled with the economic downturn has threatened the income of taxi drivers. Their average revenue is down to 400 baht a day, compared to 600 a few years ago.

"Developing a taxi booking application is not difficult, but gaining recognition is. That's why we've joined hand with Line Man," said the co-op president.

Apart from major players in the mobile taxi booking app industry, there are other choices such as taxi call centres and local software developers, altogether boasting 20 applications.

Within the next two years, only three or four players will survive in the ride hailing industry, he said.

Siam Taxi Co-operative will also partner with other taxi co-operatives to increase their number of vehicles. The co-op expected to have at least 8,000 cars in September -- the pilot period.

Line will train taxi drivers to use the mobile app, earning revenue share from taxi booking fees.

"We have yet to talk about percent share, but will most likely take some 50% of the booking fee," Mr Vitoon said.

A fully commercialised service will come at the end of November, with some 10,000-20,000 taxis available.

The co-op aims to have 40,000 taxi cars in the Line Man network within two years.

Thailand is the latest country where Line is offering taxi booking service, said a source at Line Thailand.

But unlike in Japan, where the service is offered as one feature of the standard Line chat app, in Thailand it is run via Line Man. In Indonesia, Line works with the motorbike taxi on-demand service, Go-Jek, via its chat app.

Mr Vitoon said there are over 90,000 taxis on the road in Bangkok, some 20,000 of which will be retired by early 2018, changing the supply and demand balance.

Sanith Phromwong, DLT director general, said the department is not against mobile app technology, but personal car owners who want to provide services must apply for a public car license and register their vehicles as public transport.

Drivers have to pass a criminal-background check and their profiles have to be kept in the DLT database.

"Public transport and car licenses must be covered with third party personal insurance," Mr Sanith said.

He said the DLT will pass a new regulation mandating that taxis have card readers, cameras and GPS for monitoring driving behaviour and location.

"New vehicles must employ the system and once the regulations go into effect, existing taxi need to upgrade and comply with the new regulation within a year," he said.

The DLT also plans to introduce Taxi OK, its own mobile taxi booking app, by year-end.

Under the new DLT regulation, taxi radios and taxi co-operatives need to shift their services by upgrading to become "Taxi Management Centre", collecting taxi data locations in their network and delivering it to the DLT centre, said Mr Vitoon.

Wutthikorn Manomaiwiboon, chief executive of Taxi-Beam mobile app, said operators need to be unique to survive in this competitive market.

Taxi-Beam is the first neutral Thai taxi-booking app that pools taxi radio call centres and taxi garages, including individual taxis, into one network. Taxi-Beam has 3,000 taxis in eight provinces including Bangkok a figure it aims to increase to 20,000 by year-end.

"Thailand's ride-hailing and taxi booking app market will face fierce competition from promotional packages, similar to [the situation] in China, leading to mergers and acquisitions," Mr Wutthikorn said.

GrabShare is one of the Asian ride-sharing services that are holding their own against international competitors.

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