Street hails continue to be a viable option for commuters even amid the rise of ride-hailing apps. But the new ERP system will make cruising for passengers expensive, says Senior Transport Correspondent Christopher Tan.
Not end of the road for flagging down a cab Up to 70 per cent of ComfortDelGro's rides are still street hails - a sign that this old-school method is still relevant after six years of unfettered growth in the ride-hailing sector. PHOTO:LIANHE ZAOBAO

It has been six years since ride-hailing firms appeared here. For many people, flagging down a cab on the road has, as a result, become as unthinkable as fishing out the exact change from their pocket to pay for bus fare.

With a few taps on the phone, their ride is secured and they can wait, sometimes in air-conditioned comfort, for it to arrive at their doorstep. No walking, no sticking out your arm, no aggravation when empty cabs pass you by without stopping.

So, is street hail dead? Not quite yet. Going by a survey The Straits Times (ST) conducted this month, it is still a viable way of getting a ride.

It has been six years since ride-hailing firms appeared here. For many people, flagging down a cab on the road has, as a result, become as unthinkable as fishing out the exact change from their pocket to pay for bus fare.

With a few taps on the phone, their ride is secured and they can wait, sometimes in air-conditioned comfort, for it to arrive at their doorstep. No walking, no sticking out your arm, no aggravation when empty cabs pass you by without stopping.

So, is street hail dead? Not quite yet. Going by a survey The Straits Times (ST) conducted this month, it is still a viable way of getting a ride.

A new Point-to-Point Passenger Transport Industry Bill tabled in Parliament on July 8, if passed, should also change the landscape for drivers and riders. For instance, a street-hail licensing regime might allow ride-hailing players to enter the street-hail market (which only taxis can operate in now). Technically, this means commuters on the street can flag down vehicles operated by Grab and Gojek drivers.

If that comes about, all the better for commuters who are in favour of street hails. Personally, I have had no need to use ride-hailing apps here. I drive on most days, but have never had problems getting a cab when I needed one - except when there is a downpour or a major MRT breakdown (which thankfully, has not happened in awhile).

These days, I get a cab within three minutes of stepping out - sometimes, within a minute. Quite often, I see fellow commuters tapping on their phones as I join them on the kerb.

And they will still be tapping when I am well on my way. This was, in fact, what prompted me to do the rides survey, to see if what I had been experiencing was unusual. As the poll results show, it is not.

Regular commuters seem to know this already. This explains why up to 70 per cent of taxi giant ComfortDelGro's rides are still street hails - a sign that this old-school method is still relevant after six years of unfettered growth in the ride-hailing sector. (There are now 46,000 private-hire vehicles, versus 20,000 cabs.)

Despite the taxi fleet being less than half the size of the private-hire fleet, taxis still accounted for nearly two-thirds of some one million point-to-point daily trips in 2018.

ComfortDelGro controls 60 per cent of the taxi market. If its experience is extrapolated, it means street hails account for about one-third of point-to-point trips.

This, however, is likely to change. Before ride-hailing apps appeared in 2013, 90 per cent of ComfortDelGro's trips were street hails. The proportion of street hails has contracted by 20 percentage points in six years. Will it contract further, or has it plateaued?

The Point-to-Point Passenger Transport Industry Bill may give it a reprieve, but the downward trend is unlikely to reverse. Over time, more people are likely to turn to apps to hail a cab or private car - which explains why ComfortDelGro is growing a private-hire division.

The company's own phone taxi app is also gaining traction, after recent improvements. So, in the long run, the share of street hails will diminish.

The likelihood of that will be sealed once the next generation of Electronic Road Pricing (ERP) comes. ERP 2.0 will have distance-based charging capability. When this is switched on from as early as 2021, it will no longer be attractive for cabbies to cruise for customers.

From a transport and environmental perspective, this is a good thing because cruising for-hire vehicles, whether taxis or cars, impose a heavy cost in terms of congestion and pollution.

ERP 2.0 aside, the ageing population will also contribute to the gradual decline of street hails. Younger people are now so comfortable with tapping on their phones to get a ride (and pretty much everything else), they would not even consider flagging down a cab at the kerb - even if, as ST's survey shows, doing so is cheaper and often, faster.

On the drivers' front, empty cruising is a drag on earnings (fuel expended) and physically draining. If all rides were to be booked, they can reduce their cruising time.

But, of course, they might wait on road shoulders - as many private-hire cars do now - and cause another undesirable externality. In the current state of play, the point-to-point transportation sector is still in flux. For one thing, it is clearly not sustainable to have nearly 70,000 for-hire vehicles jostling for one million rides a day.

The maths does not add up. It means about 14 trips per vehicle, which is enough to cover rental and fuel, but leaves little else for the driver. At an average fare of $15, each car will only generate $80 in earnings per day after rental and fuel. Or $29,200 a year if a driver works two shifts a day for 365 days.

What is going on now is that private-hire players such as Grab and Gojek operate in a lower-cost environment than cabs (this may change after the new Bill is passed).

Furthermore, they are subsidising fares heavily and doling out driver incentives. They are able to do so because there seems to be no shortage of optimistic investors.

The app firms hope to eventually edge out the traditional taxi firms. It will probably take several billion dollars more to achieve this end, but in the meantime, these firms are venturing into other areas - including finance - in their quest to become "super apps".

Eventually, it will come down to a test of endurance between them and the taxi companies. But for now, don't rule out street hails and taxi companies yet.