Author’s note: This article was first published in 17 July 2017. Subsequent updates to the article did not alter the original.
In this new model, Uber and Grab woo commuters with promotions galore to gain brand loyalty. This has spawned a pool of commuters who compare fares and book rides solely through apps. With app-based taxi booking going mainstream the call-centers dispatching taxis went quiet. Of all the licensed taxi-companies only Comfort has transitioned to the world of app-based taxi booking.
After the Regulator imposed minimum standards ride-hail in Singapore is no longer an asset-light, part-time gig! Yet the ride-hail Operators seem oblivious to the need for a sustainable business-plan.
While no one is shedding tears for the days when empty taxis cruised right past you to earn a booking-fee, it is not clear if ride-hail services are sustainable in Singapore. The Regulator has mandated minimum standards that aligns private taxis with the regular ones. Following this, ride-hail operators now own a majority of their fleet and the hirers drive full-time. Ride-hail is no longer a asset-light, part-time gig! Yet, the Operators seem oblivious to the need for a sustainable business-plan.
JustGrab’s Hybrid Model
Enter the hybrid model! This is one where cabbies are incentivized to accept bookings made through ride-hail platforms. JustGrab’s promise of flat fares is great for the commuter but it works by passing on the risk to the cabbies. Taken together with Grab’s 10% commission on bookings this relationship could end sooner than later.
Smaller taxi companies are likely to dwindle and die! Their owners’ assumptions of taxi business offering steady returns never materialized and now the landscape has changed beyond recognition.
The smaller taxi companies are likely to be the first casualties of the disruption bought about by ride-hail services. Their Owners’ assumptions of a business offering steady returns never materialized and without the acumen to adapt, they will dwindle and die!
When the smaller taxi companies fold, Comfort which has the largest fleet and the tightest operation, could fill the gap and increase its market share. Comfort could either increase the number of taxis or enter the ride-hailing segment with private cars.
Comfort responds to competition
Comfort’s recent offer of flat-fares with no surge pricing is likely to attract commuters away from the competition, but it needs to do more to attract the younger set. Amidst the changes, Comfort has held its own so far but will have to up its game to regain its market-share.
While Comfort is strong enough to compete with ride-hailing services the smaller taxi-operators however are unlikely to last.
Update: October 1, 2017. Comfort in talks with Uber
Since this article was published Comfort is in talks with Uber about acquiring its local operations: while its competitor Grab turned down an offer to acquire SMRT Taxis raising questions over the future of SMRT Taxi; relationship between Grab and cabbies is fraying; and finally Grab continues to attract investment and rack up losses.
The consolidation in the taxi-industry predicted in the article above is underway and Comfort Cabs is likely to emerge stronger.
Update: December 20, 2017. Comfort Delgro acquired 51% of Uber’s Singapore operations.
Comfort Delgro acquired 51% of Uber’s Singapore operations. Once the deal is approved, Comfort will manage a fleet of approximately 12,000 private-hire vehicles currently owned by Lion City alongside its own fleet of about 15,000 licensed taxis.
The deal is not so much about the additional cars but about the access to Uber’s platform.
The paradigm for the taxi business has changed from earning passive rental income to dynamically matching demand with supply and equitably pricing the service. The partnership with Uber gives Comfort a platform for achieving it!
The taxi business is no longer about passive income from taxi-rental but about dynamically matching supply with demand and equitably pricing the service. The partnership with UBER gives Comfort access to arguably the most advanced ride-despatch platform!
Following the acquisition, Comfort can build their capabilities in intelligently fulfilling demand for urban mobility regardless of who owns the vehicle.
The acquisition is transformational for Comfort Taxis but it will be some time before it contributes to the bottom-line.