Taxi companies and drivers must up their game

QX179R

1 May 16, 19:47

Taxi companies and drivers must up their game now: Ang Hin Kee

SINGAPORE: MP Ang Hin Kee has been the champion of the rights and welfare of taxi drivers in Singapore for about four years. In recent years, the Adviser to the National Taxi Association may have found his biggest challenge yet – addressing concerns from taxi drivers about the entrance of private-hire car services into the Singapore market.

The Land Transport Authority (LTA) has announced new regulations for private-hire cars, but Mr Ang said more still needs to be done. For example, reduce compliance costs for taxi companies that have to abide by obsolete regulations. He said these costs are ultimately passed on to drivers, in the form of higher taxi rental rates.

But what about the views of commuters, and how will they stand to gain in a more competitive market? Mr Ang went “On the Record” with Bharati Jagdish about whether taxi companies can step up to the plate, and why he stands by his statement that regulations such as Taxi Availability Standards are obsolete.

QX179R

1 May 16, 19:49

Ang Hin Kee: They have to comply with certain LTA regulations with regard to their quality of standard service, their taxi availability, and their operator license. Some of these compliance costs are converted to rental cost on the taxi drivers. This invariably raises the cost of operating the business for them.

Now on the other hand, we say that if these regulations are really obsolete, and not necessary to be put in place, can they be removed? One of the things that the taxi drivers have given me feedback on is that they invariably get phone calls and reminders from their taxi operator, who says: "Today, you drove only 245 kilometres. You are short of 5 kilometres. For the week, you have to hit that yardstick 5 times out of 6 times. You need to drive another 5 kilometres. You have to do this even if it’s past midnight on a Wednesday night and you're driving empty. Just meet that target, and we will consider your case closed."

So that availability standard doesn't translate back into...

Bharati Jagdish: Availability to commuters. But the fact is there were problems with availability to begin with, which is why the regulations were introduced, and which is why these private-hire car services and third-party taxi apps could move in to fill the gaps. So if it were up to you, how would you ensure that demand is met effectively by taxi operators?

Ang: If the compliance costs are not so high, we can look at lowering the taxi rental, removing some of the booking fees, so that the taxi drivers can use the company's booking system, and commuters can find it easy to use the booking system.

Instead, now we have every taxi company with one booking system. We all tend to use the one with the biggest fleet size, because the probability is that I'll get a taxi there easier. We could have a unified system, whether the taxi operators want to come together to do one, or LTA wants to get them to get their act together to offer one, and make it easier for commuters to look for a taxi, and a taxi look for commuters.

Bharati: But third-party apps like Grab have managed to do that. These things are available already, thanks to external players. The taxi companies couldn’t do it on their own.

Ang: Precisely. That system is something that third-party apps have brought in as new innovation that we do urgently require. Why is it that the taxi companies didn't do it ahead of time? Perhaps it was a lack of competition.

But now with this competition, I think this particular innovation has made it easier to match demand and supply. Now if you have innovation, why do you still need your 250km availability standard and the like? Push this innovation and this kind of adoption of technology to be the mainstay and the main solution, and even make it a licensing requirement, rather than push ahead with some rather old proxies that may not have relevance to today's market requirements.

TAXI COMPANIES NEED TO CHANGE THEIR BUSINESS MODEL

Bharati: There is one thing that taxis can do that private-hire cars cannot and that is pick up passengers who flag them down. If you’re suggesting that taxi operators rely on third-party taxi apps to service people, what about flag-down customers?

Ang: Yes, the majority still looks at waving down a taxi on the road, or look at taxi stands as a means of getting a cab. But if we are very confident this kind of technology would give us better matching, let's just leapfrog into that and just focus our resources and help people match the supply and demand together.

Bharati: But again, how to ensure that flag-down customers are served as well? Customers shouldn’t always be expected to book a taxi and have to pay a booking fee.

Ang: So the booking fee, and the various surcharges put into the entire taxi fare structure, has to do with the fact that the taxi operators’ business model is designed in this manner – taxis will have this rental, taxi drivers pay me a fixed amount everyday, but in order to help drivers defray their costs, there's a flag-down fee, there's a surcharge, there’s a booking fee. Just so the driver can make ends meet.

So if you revamp one of the variables in this whole entire sequence, of how the costing gets worked out, at the end of the day it should filter down to how the driver, and how the commuter would benefit.

QX179R

1 May 16, 19:50

Bharati: So which variable do you suggest be changed in this business model?

Ang: Well, one of the things that a lot of drivers say is that they have no choice but to take a vehicle at a daily rate of S$133. It’s not as though they can say: “Actually, I only drive for 12 hours. Can I therefore only rent for S$67.50 or thereabouts?”

The contract is drafted in such a way that you are the main contractor. So the model is: Take the vehicle, the operator will help you find a relief driver, if there's any to be found. If not, the driver is responsible for paying that daily rental. A more responsive business model would be one in which there are variations for those who want a daily rate, those who want half-day rate, by the hour, by six hours, by 12 hours, rather than just this current fixed model.

So the fixed model has been something that we've asking them to review, but with the competitors coming in, your private-hire cars, hopefully this pressures them to revisit their business model.

Bharati: With the model that you suggested, there also has to be some assurance to the commuter that when they need a cab, there will be cabs.

Ang: If a taxi vehicle on the road has got two to three part-time drivers assigned to that vehicle.

Bharati: And it should be the job of the taxi companies to ensure that the vehicles are being used effectively.

Ang: If that vehicle is being driven by two to three people, albeit in a part time manner - so I take 8 hours, you take 8 hours, another person takes 8 hours - that's 24 hours; that vehicle is being used continuously. Whereas if you rent to one person and say, here's your rental go ahead and drive, and try to find your own relief driver, it doesn’t work.

Having many part-time drivers, or having many options doesn't mean that the vehicle is being used less. If we can assure that all the 28,000 to 29,000 taxi vehicles are being fully utilised by as many drivers as possible, I think that at least the availability in terms of using the existing resources is being addressed.

CAN TAXI COMPANIES UP THEIR GAME?

Bharati: You said earlier we should capitalise on technology and now, competition should force the taxi operators to re-look their business model to serve drivers and commuters better. But all this would not have happened if everything had been regulated, if the Singapore Government had been protective of taxi companies and not let in other players such as third-party apps and private-hire vehicles. So instead of grumbling about these private-hire car services and third-party taxi apps, shouldn't you welcome all of these innovations into Singapore, and see where the chips fall? After all, the other services also open up options for taxi drivers.

Ang: We do welcome the advent of technology and innovation. In fact with competition, sometimes, the incumbent would feel the pressure, to do better for their working people on the ground, which is the drivers themselves. And invariably the drivers must find that either they are being treated better, or the terms of their contracts are being improved. I think that's something we do welcome.

Bharati: So why did you call for a level playing field between these services and taxi services. If third-party apps and private-hire services had to deal with just as much in terms of compliance costs, no one would be competitive.

Ang: Let's just take stock of the proposals we put forward for the private-hire drivers. We put forward the need to have the drivers go through a security screening and medical check-up. That is for the safety of the commuters. I think most people would agree that those are basic hygiene measures that need to be taken.

The second thing we ask for is to lower the compliance costs of the taxi business. Not to increase the compliance costs of the other party. The third one that we ask for is really, with all this technology, can the LTA push for greater adoption of technology in the taxi business.

So of the three recommendations that the union has put forward, one has to do with commuter safety, the other one has to do with compliance cost of taxi operators, and the third one has to do with adoption of technology.

QX179R

1 May 16, 19:52

Bharati: So you're not advocating that private-hire car services be regulated beyond the regulations that have already been announced?

Ang: Put a bit more impetus to revamp the industry instead of using older proxies and yardsticks to measure the performance of a taxi operator; and the livelihood of the taxi driver.

Bharati: Don't you think that the taxi operators can do something to step up to the plate right now, instead of waiting for the LTA to do something?

Ang: Both sides. Because on the one hand, the regulatory control does need to be calibrated to be suitable for market needs. On the other hand, as a profit-making company, taxi operators need to step up and do a little bit more than what they've been doing.

In many of your programmes in the past, we have talked about taxi operators needing to be more innovative, and to a certain extent we are glad that this competition has put the pressure on existing operators to see how can they up their game, in order to do better for the drivers, as well as the commuters.

Bharati: In your interactions with taxi operators, to what extent do you really feel that they are feeling the pressure right now, enough to effect change? Because, for so long there were problems, and they were not doing anything to change. It took other players to come in before the operators even woke up. But they woke up to say that the playing field is not level. They didn't wake up to say: “We must do better."

Ang: Correct. So let's continue to make sure that there's a concerted effort not only from the drivers’ point of view, but also from the regulators and other stakeholders.

The taxi business needs to look at a revamp. They may have been comfortable in the past, but now, there's a need to be more innovative, or push a bit harder with regard to how they share profit, with regard to how they design their contracts, with regard to how they make money.

THE RISE OF A MONOPOLY

Bharati: Recently, you said that private-hire services slashing fares is a bad idea. Many on social media have said that instead of competing fairly, the taxi companies and the National Taxi Association made up of taxi drivers, are just being crybabies. Why don't you just step up to the plate and do better? Why complain? What do you have to say to that?

Ang: I think we are looking at some of the developments by the private-hire cars; in terms of say, reducing their flag down fare by 15 per cent, but not changing the terms for the driver. Whether it's a price war or trying to capture certain market segments, that's a business decision. And commuters will definitely benefit from a lower fare.

However, if you make a business decision based on making up for the commuter discount from the drivers’ earnings, not from your own profits, or your own venture capital fund, the driver has just got to work harder to earn the same amount.

What we're saying is: Use your own profit, and contribute it as a coupon or a discount to the commuters, but don't take it from the drivers.

Bharati: But if you're talking about Grab, they are offering a fuel discount program to their drivers, a passenger finder feature to notify drivers of places where passenger demand is high. The drivers can also buy a smartphone at a subsidised rate of S$150, and will be given increased insurance coverage. So they are providing incentives to the drivers as well.

Ang: There is a popular saying on the street: “The wool is always taken from the sheep's back.” You're just cutting off the wool and giving it back to the sheep. So it's taking from their earnings, and giving it back to them in a different form.

Bharati: Even if you feel that’s unfair, why worry when market forces would probably do the trick. If drivers are not happy, they can leave.

Ang: I think competition does bring about that kind of benefit to the driver, but by extension, if this market practice, or this mode of business operations continue unabated, and the other operators, too, start taking this approach and say: “This is something that I can make viable. I will find ways to either cut down the flag down fare, or increase the commission share in order to increase my market share”, over time, this will become a trend. I may come across as an alarmist, but this will become the modus operandi. Then, what will happen is the driver over time will suffer.

Hopefully, the free market will kick in and none of the players will become a dominant monopoly. There will be equivalent forces checking and balancing one another to ensure that commuters will benefit.

Bharati: But you're afraid of the other outcome, which is that there will be, again, one player emerging, and there being a monopoly in this sector, which wouldn't serve the commuters either.

Ang: Yeah, it's almost like letting history repeat itself. Today, there are five to six taxi companies in Singapore. There should be enough free market forces to have checks and balances, one against the other. But, the size of the players varies. One player is much bigger than the rest. It doesn't really create that check and balance. So you say, okay, let's introduce private-hire services. By all means, come onto the scene, but over time, will this industry also evolve into a big monopolistic player or two, and therefore dictate both the price to taxi drivers and the fare to commuters. I hope that won't happen.

Alternatively, it could go the other way, whereby there's surge pricing. When the demand is very high and many people are looking of transport, are you willing to pay two to three times the going rate? Then that doesn't become a public service vehicle any more. The person with the highest need, or the deepest pocket, will get the service.

Bharati: But private-hire cars are just that, they're private-hire cars. They're not pretending to be taxis. Taxis could provide that public service, make themselves available on the roads, pick up flag-downs, make themselves more reliable than private-hire cars, so that if private-hire car services develop questionable practices, consumers can decide not to use them.

Ang: But if you have a bigger market player emerging from there, your commuters will invariably flock over there to take that service. If the market is played out fairly, nobody is being monopolistic and, everybody treats everybody fairly - that's a good outcome.

Bharati: Why aren’t you more optimistic of a good outcome?

Ang: I think innovation is good. I believe that market forces, when played out with enough players, will offer a good check and balance. But let's make sure that behaviours and activities by these companies ensure that outcome. An effective free market entails that there are enough players who will be able to compete with one another.

QX179R

1 May 16, 19:53

Bharati: But you just have to let that evolve, don't you? Or do you feel that artificial measures need to be put in place in order to ensure a more positive outcome?

Ang: It is a situation whereby you will have to invite more players and taxi operators, and say that they have an equally good offering. All the players must be able to want to fight fairly, and sustainably for that share of the market. This is why some of the regulations with regard to compliance for the taxi operators need to be addressed.

Let them come on board to fight more fairly. Let the taxi drivers and the drivers of any other vehicle ensure that they don't have to be the ones to always face the cuts or higher rentals. I'm not saying we should shield them from hard work, but make sure that it doesn't become something that is just easily transferred downwards onto the drivers.

Bharati: You say a number of regulations that taxi companies need to abide by need to be looked into. Aside from Taxi Availability Standards, what do you think needs a relook?

Ang: Well, they have Quality of Service requirements that look at call booking responsiveness. We have a system today where you can do a lot of things through apps. Through your phones. We don't need a person on the other end of the phone to ensure that these things are being met. You don't really have to measure all these little details.

The taxi operator actually has to hire a team of people to track and ensure they have met all the indicators every month dutifully. Whether those indicators offer better service is a different question. It just creates more compliance, more rules, but it doesn't quite give better service, and sometimes people don't see the relevance of it.

TAXI OPERATORS, DRIVERS MUST GET THEIR ACT TOGETHER

Bharati: We still have to bear in mind that the reason these regulations were introduced was that taxi operators were not meeting commuters’ needs.

Ang: Incumbent operators don't see the pressure or the need to change as urgently as when there's a new competitor on the scene. This new competitor has now come, not just knocking on the door, but has actually come with a fleet of vehicles, and is saying that they can offer a better service. And I think it's about time that all the players get their act together and say that they do need to be more accountable to innovation, to offering a better package.

Bharati: To what extent do you think the taxi companies also need to be doing more in terms of hiring serious drivers. Not, for instance, those who are actually renting the taxi to use it as their own private vehicle. We’ve heard of so many cab drivers who are really not serious drivers, and it sometimes feels like they're taking advantage of the system. They're taking advantage of commuters as well, because they drive on their own terms, they cherry-pick passengers, disappear during peak hours and wait for bookings. They don’t seem serious about providing a service.

Ang: Most of the professional full-time drivers with a family to feed, work very hard in order to ensure that they stay out of trouble. They actually drink enough water and exercise regularly, because they know that, any time they're out of action, they will not bring the bacon home. These full-time drivers are very responsible, and they make sure that they deliver good service.

QX179R

1 May 16, 19:54

Bharati: But then you also have the drivers who, when it rains, go home to sleep, or hang out at the coffee shop. Do we really need such people in the industry?

Ang: The minority are not reflective of the majority, because there are more than a million trips per day and if there is just a 1 per cent or half a percentage of drivers who don't provide the right service on the ground, and they taint the image of the other 99.9 per cent of the drivers, then it’s not fair to the majority who do a good job.

But you do need the taxi operator to ensure that they get customer reviews coming in and say: "Commuters are saying that your service is not very good, can you pull up your socks? There's a training programme to go to. You must up your level of performance and your game." Rather than say: "I received two complaints about your service. I'm going to terminate your service. You cannot join my taxi fleet any longer."

That is just pushing the solution away and saying that I only want to keep drivers who comply with high level of standards.

Bharati: But whatever their number, whether they are the minority or not, if drivers who are not performing on the ground are kept on just because they still manage to pay the rent, it would be a disservice to commuters.

Ang: An equal amount of effort should be going into people who are not performing. At the workplace, we don't just hire and fire a person. We say: “Okay, you failed to deliver some things. Let's put on a performance review proposal to you. Can you up your level? What kind of supervision do you need? What kind of training do you need?"

There needs to be some ownership. Give people a chance to up their game.

RELATING TO TAXI DRIVERS

Bharati: On a personal level, when you first came into politics, a lot was said about how you came from a humble and challenging background as well. You weren't a typical PAP candidate. You didn't go to top schools for instance. How much easier would you say it is for you to relate to taxi drivers than it would be for others?

Ang: I have family members who are taxi drivers. My uncle is a taxi driver. My dad possesses a Taxi Vocational License. Recently, one of my cousins’ husband decided to become a taxi driver because he lost his job in the industry and this was one of the viable ways of making ends meet at home. So, yes, we do come across people who work hard on the ground to make sure that they bring home a decent income to their family.

Bharati: Which aspects of a taxi driver's life do you think people understand the least?

Ang: Well, over the last few years, I have visited hospitals more often than I count. It's almost every three months that I go to one of the hospitals and either a taxi driver has fallen ill because of a stroke, high blood pressure, by-pass, kidney failure…

Sometimes it’s because they get into an accident. When I go to the hospitals, I realise one thing. Fellow taxi drivers come along and they render support to their brother, or sister, in the trade. I know of a taxi driver who helped another driver who had a stroke. And every lunch time, he sent food to his house.

What we seldom see is behind the scenes. A lot of these drivers, female or male, give support to their co-workers of the same vocation. They see when you fall into difficult times, or when you get assaulted by a passenger, when you get verbally abused, or when people cheat you of your fares, or you fall sick. That spirit of comradeship - that's something we don’t see most of the time.

ADAPTING AND GROWING ON A PERSONAL LEVEL

Bharati: Let’s talk about you now. You were, at one point, retrenched and in fact, I know that your job with the NTUC is actually the eighth one you've had in the last 30 years. A lot of people today are struggling to come to terms with the need to be adaptable in terms of career change, of lifelong learning, of being adaptable. How did you do it over the years?

Ang: Well, some of the changes that I took on were voluntary. Others were because of circumstances. One company that I worked for didn't have sufficient funds to pay the workers, and then we were retrenched, with no benefits. They owed us some salaries in fact.

I also worked in China for two different companies. I've worked for voluntary organisations like the Badminton Association where we ran sports programmes for people interested in the game, and for competitive standards. I also worked in the Government sector in the Singapore Tourism Board, with the Police Force, and Sports Council, with dot.com companies. You really need to find ways to be adaptable, and sometimes it goes against the natural grain.

The natural grain is when I'm busy working, how to find time to cultivate a network, to look for new skillsets. But when I'm jobless, I have all the time in the world, I can get trained, I can do everything I want, but if the market is not hiring, all these efforts seems to come to naught. So, there's this dilemma that many of us do face when things don't go our way.

Bharati: So how did you manage to spring back from retrenchment?

Ang: Well, after I was retrenched, for about three months, I recall sending out about 25-30 resumes, and bear in mind one thing: Each one was customised for the job vacancy. Yes, there was a pay cut. It was different job, different pay. So, how do you get yourself around that option? Think about how it’s going to give you new openings, new learnings, rather than have a yearning to have the same thing as before.

Bharati: Did you feel any fear making all these changes?

Ang: My wife, during that period, was a bit bothered because I started shifting furniture around.

Sometimes when you're waiting with nothing to do, you start shifting things, rearranging books, flipping books, rearranging photo albums. You want to keep yourself occupied, and as the days drag on, where there is no news, or when you receive letters of rejection, you feel a bit downcast. But then you develop a regime. Exercise, read up, continue to pound the pages, classified ads.

QX179R

1 May 16, 19:55

You just cannot give up, because if you start to feel down about yourself, how can you expect others to feel upbeat about you coming to join their team? They want an asset in their work force; they want a stronger member to join their team. So you’ve got to be fit, you’ve got to be strong, and you’ve got to be prepared to try.

I'm prepared to learn, and I'm prepared to be a key member of the team. I don't come with baggage that the employer or the new team of colleagues have to help me adjust. This is the mindset and goals that I have to set before I step into the interview room.

Bharati: Some analysts have said that the Government needs to start thinking long-term. Unemployment may go up in the years to come. There’ll also likely be more underemployment. There perhaps needs to be something to help these individuals in the form of some retrenchment insurance, or unemployment benefits while they’re getting trained for a different job, as not all training programmes offer a training allowance and living allowance. What do you think of retrenchment insurance or unemployment benefits?

Ang: A few years back when I had that retrenchment, I had to go back to the savings that I had put aside. The advice is always put aside three to six months of your regular income as cash in a bank. So before this notion of retrenchment benefits or insurance kicked in, many of us set aside certain rainy day savings in case it rains.

Insurance is risk pooling and has been discussed in many academic fields. Some say it’s the best thing since sliced bread, some say that it breeds certain habits and behaviour in people who just wanted to tap onto that pool and become less focused on their work ethic, and say: "No worries, anyway I have a retrenchment benefit. If I lose my job I still have something to fall back on."

It makes genuine people who save for rainy days, become the invariable victims of it because those who want to game the system will push up the premium costs of those insurance benefits.

Bharati: In which case, you might as well save money in a bank account, instead of putting it towards some sort of retrenchment insurance premium. But of course, some countries have done this successfully. European nations such as Germany, for instance, are not having serious problems just because they have unemployment benefits for people.

Ang: We also have to bear in mind individual income tax is 30-over per cent or up to 40 per cent in some Scandinavian countries. Some of this is because of things like unemployment benefits from the Government.

So let's look at the entire package we have today in Singapore, and ask ourselves: "How do we help people with low income?" We give you Workfare. Those who want to change careers can do professional conversion programmes - there's a training allowance, there are things to push you up to that level where you can perform.

You cannot always go for the “soup of the day” and say: “I saw this in one of my travels; I read about this programme and this is the best thing since sliced bread." You can’t discount every other implication, or any other cost that comes with it.

- CNA/kk

Ct2220

1 May 16, 20:57

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