Taxi wars: The incumbents strike back

Singapore

JUST when the likes of Uber and GrabTaxi have resigned the global taxi industry to the inevitable - that incumbents must innovate or be disrupted - a new player has entered the game, set on empowering the entrenched taxi companies instead, and helping their drivers compete on a level playing field.

Karhoo, a ride-booking app that will be launched in Singapore, New York and London early next year, is a "game-changer" that will "excite the regulators", according to founder Daniel Ishag.

It works only with licensed taxi and limousine companies - hence, only accredited drivers - to offer on-demand rides. Commuters, for the first time via an app, will be able to compare and choose from a list of nearest rides based on criteria they care about, such as cost, arrival time or vehicle type.

And it is in for the long haul, Mr Ishag told BT. On Saturday, Karhoo announced a partnership with the newly-formed NUS-LTA Transport Research Centre to develop localised solutions for the Asia-Pacific, as part of efforts to build a "solid foundation" in the market.

It's a win-win, said centre director Lee Der-Horng, a civil and environmental engineering professor at the National University of Singapore. "While Karhoo will tap NUS's academic and research strengths, students at the research centre will benefit from real-life data that Karhoo will be supplying, which is needed to validate models for mobility and travel behaviour studies."

This is the second partnership that Karhoo has inked with an institution here before its launch. The first is with Singapore's largest taxi company ComfortDelGro, which would put 17,000 taxis and 34,000 drivers on Karhoo's platform.

ComfortDelGro had notoriously discouraged its drivers from accepting jobs from third-party apps such as Uber and GrabTaxi, including waiving call-booking levies for its drivers for a week last year so that they can earn up to S$1 more for bookings assigned via ComfortDelGro's own despatch system.

"But here's where Karhoo is different. It doesn't need drivers to download a new app, as it relays job bookings to the taxi companies' existing despatch systems, boosting bookings - by up to 50 per cent - and enabling revenue sharing," said Mr Ishag.

For these reasons, he said, it was only a matter of time before the other taxi companies partner Karhoo, making it the biggest one-stop booking platform in Singapore. They are TransCab (with some 5,000 taxis), Premier (2,000), Prime (900), and SMRT (3,500), although the latter is still observing its joint venture with London taxi-booking app Hailo.

Prof Lee, an adviser of the startup, said: "One important thing commuters may not be aware of is that with Karhoo, all taxi rides are insured because the partner taxi company endorses Karhoo . . . but not rides assigned by other third-party apps."

Private car (not taxi) rides booked through GrabTaxi's GrabCar or Uber's uberX and uberEXEC, however, are insured, as it is mandatory for these vehicles to be commercially covered to provide such rides.

Recently, taxi drivers here have been crying foul over the rise of private car services, as private car drivers, unlike taxi drivers, do not require a vocational license to provide transport services. The Ministry of Transport said in October that it would review Uber and GrabTaxi, and where justified, level the playing field between unlicensed private car drivers and taxi drivers.

Said Mr Ishag: "Taxi drivers have paid their dues; Karhoo is an opportunity for them to benefit from on-demand tech."

But will taxi drivers wind up competing with limousine drivers for jobs via Karhoo? Mr Ishag disagreed: "We're about offering commuters choice - the right vehicle at the right price for the right occasion."

Karhoo will also offer a pre-booking function that allows overseas commuters travelling to Singapore to book a ride here even before they arrive.

Its greatest challenge, noted Prof Lee, will be to get through to consumers, and retain them. Karhoo, having raised US$250 million from institutional investors, is reportedly planning a US$1 billion round next year.

It has since submitted an application to be registered as a third-party taxi-booking platform here, said an LTA spokesman. This follows a bill passed in May that would grant LTA powers to regulate such platforms.

Meanwhile, competition in the ride-booking space continues to heat up. New player RYDE, a carpooling app that matches private car drivers with commuters going the same way, recently raised US$1.5 million in seed funding. Pair Taxi, launched this month, matches up to three commuters at a taxi stand - whose destinations are within 2km of one another - to one taxi.

Earlier this year, GrabTaxi opened a S$100 million R&D centre here to develop technologies for the cities in South-east Asia where it is focused, while Uber partnered Carnegie Mellon University to conduct R&D for its over 300 cities worldwide.

Asked about Karhoo, GrabTaxi and Uber said that they welcomed the new competition. An Uber spokesman said: "Competition provides commuters with more, high-quality choices, and drivers with more, equitable and flexible economic opportunities. This helps the industry innovate and move forward."

Said Lim Kell Jay, general manager of GrabTaxi Singapore: "Street hailing remains our greatest competition."