Overview of the Industry
Over the last five years, the Singapore taxi industry has seen tremendous changes, most of which have resulted from the development of private app-taxi companies. The introduction of the taxi bookings apps in 2013 was marked by an explosive growth of the demand for the app based taxi services from the main global players that is Uber and Grab car. Over the years, this has continued to affect the traditional taxi operators; according to research, the advent of the taxi app companies has reduced the regular taxi earnings by 20 % (Lee, 2015). This has been the main concerns for the taxi drivers, who feel that a government intervention is needed to protect their source of livelihood.
With the taxi app services accepted in most countries around the world, pressure has mounted on the Singapore government and transport authorities on the most amicable solution to solve the cries of the traditional taxi operators. According to a Straits Times article, Trans-Cab, the second largest taxi operator in the country loses approximately & 3 million as most commuters now favor using the app based taxi services. Today, the company has over 800 cabs lying idle (Tan, 2015). On the other hand, the emergence of Uber and Grab car services has led to the burgeoning of the private car hiring companies.
For instance, Lumens auto, one of the largest private car hiring company has recorded a dramatic increase in the number of people hiring cars for the private car-sharing companies. This has worsened the woes of the traditional taxi operators. Apart from the threat to the taxi industry, Uber and Grab car has been criticized for allocating chauffeur jobs to anyone in possession of a driving license. The concern has been the safety of the commuters, who feel the government need to intervene to ensure their safety. Currently, both the Singapore public and the app-based taxi drivers are confident about the development in the taxi industry. For instance, most commuters reckon that the Uber/Grab car services are more accessible, even in bad weather compared to the normal taxis. To the drivers, working for the private car-sharing companies has proven profitable. Most of the operators report daily earnings of about $ 500 and $ 700 (Tan, 2016). These have been some of the reasons why the ministry of transports has been slow to act to the constant pleas by the National Taxi Association (NTA) to regulate taxi-booking applications.
The Singapore taxi industry has six major players, including Comfort and SMRT. Established in 1970, Comfort has a fleet of over 17000 cars. Initially registered as Comfort Group, the company mergers with ComfortDelGro Corporation in 2003. Currently, the company ferries approximately two million passengers on a daily basis, making it one of the most profitable taxi operators in the country. The company has been in operation outside Singapore. These include the 8700 taxis operating in China and 600 taxis in Vietnam (Comfort Taxi, 2016). In 2006, the company expanded its operations through the acquisition of a Scottish private car hire company, Onward Travel Limited. Notably, in 2007, the company recorded a staggering 20 million bookings, making it not only the best in Singapore, but also in the world.
SMRT is another major player in the Singapore taxi industry, operating over 3000 taxis. The company is best known for its excellent corporate governance and sensitivity to the environment, while at the same time striving to provide the best services to its customers. Currently, the company has over $ 2.5 billion worth of assets and an average annual turnover of $ 800 million (SMRT Taxis, 2016). It is, however, crucial to note that the profitability and engagement of these companies in serving the market has been significantly reduced by the emergence of Uber and Grab car and other private car sharing companies.
PESTEL Analysis
As seen above, development of technology, specifically the private car-sharing application has been one of the major macro influences on the Singapore taxi industry. The PESTEL model provides an insightful analysis of this and other macro factors affecting the industry.
Political
In response to grievances from the traditional taxi operators, Singapore authorities have been in constant talks to develop ways to regulate Uber and Grab a car, which have reportedly cut the earning of taxi drivers by 20 %. For example, in 2014, the Land Transport Authority (LTA) mandated that taxi driver applicants be certified for three years, renewable upon expiration. For the third party taxi companies, it was made official that they provide the commuters with flag-down rates, distance and time rates as well as the booking fees. The transport ministry has also developed rules to enhance the security of the taxi commuters, notably by instructing companies to use a GPS system to track the location of the taxis.
Economics
The economic benefits associated with the taxi industry have fostered its growth. It is a primary income earner to approximately 98000 registered taxi drivers (Yiji, 2016). Taxi operators earn an average of $ 450 daily, which helps them support their livelihood.
The emergence of Uber and Grab car-taxi services has, however, led to a decline in the total earnings of the traditional taxi operators. This has resulted in social conflicts between the two factions. For instance, there has been the incidence of taxi drivers attacking Uber driver in countries such as Australia and Mexico. Additionally, taxi drivers have been accused of harassing commuters or even rape the, which has increased the need for government intervention to enhance their security.
Technology
Among the political, social, and economic influences, technology has been the major factor affecting the industry. Private car sharing apps are convenient to use and offer relatively cheaper services (Kimmorley, 2016). The growing popularity of the use of such services as Uber and Grab a car as seen by most members of the Singapore public is expected to cause a structural change in the industry. With this trend, it could be a potential threat to the existence and profitability of the traditional taxi operators.
Environmental
The environmental factors relating to the operations of the Taxi industry have been characterized by various challenges. The increased competition has been one of the major challenges affecting the industry, especially with the entry of international players such as Uber and Grab a Car.
Legal Environment
The government has established new rules with the growth of the industry. For instance, in 2014, the government established new regulations, which were aimed at controlling the growing industry. Through the new rules, new entrants would be issued certificates of registration that would be valid for 3 years. Additionally, the rules outlined a payment procedure that would be adopted by third party operators.
References
Comfort Taxi. (n.d.). Retrieved July 09, 2016, from http://www.taxisingapore.com/taxi- companies/comfort-taxi/
Johnson, G., Whittington, R., & Scholes, K. (2012). Fundamentals of strategy. Harlow, England: Financial Times /Prentice Hall.
Kimmorley, S. (2016, April 05). Singapore is getting the world's first fully autonomous taxi service. Retrieved from Singapore Business: http://www.businessinsider.com.au/singapore-is-getting-the-worlds-first-fully-autonomous-taxi-service-2016-4
Lee, A. (2015 , Oct 24 ). New entrants turn the taxi industry on its head. Retrieved from Channe News: http://www.channelnewsasia.com/news/singapore/new-entrants-turn-the/2214680.html
SMRT Taxis. (n.d.). Retrieved July 09, 2016, from http://www.taxisingapore.com/taxi-companies/smrt-taxis/
Tan, C. (2015, October 10). Can't find cabs on the road? Try the yard. Retrieved from straitstimes: http://www.straitstimes.com/singapore/transport/cant-find-cabs-on-the-road-try-the-yard
Tan, C. (2016, April 14). More taxi firms eyeing Uber business model. Retrieved from The Straightstimes: http://www.straitstimes.com/singapore/transport/more-taxi-firms-eyeing-uber-business-model
Yiji, C. (2016, June 30). S'pore's getting a new taxi operator - and what this means for us. Retrieved from AsiaOne: http://news.asiaone.com/news/singapore/spores-getting-new-taxi-operator-and-what-means-us
