Hong Kong taxi industry pins hopes on new in-house booking app

City’s taxi drivers struggle for business amid growth of ride-sharing services, rising costs and complaints and falling customer numbers, but the Taxi app offers them hope

PUBLISHED : Tuesday, 24 May, 2016, 6:00am
UPDATED : Thursday, 26 May, 2016, 11:16am

Will it be the one taxi app to unite them all in Hong Kong? The Taxi Council’s new cab-hailing app – prosaically named Taxi – is being released at a difficult time for the business.

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Over the past decade, the volume of cab usage has dropped from 1.3 million daily trips to 1 million. Taxi companies and drivers have been struggling to cope with major challenges. There are constant complaints of bad service, such as overcharging and run-down vehicles. Operating costs (tyres, insurance fees and maintenance) keep rising, and they face ever stiffer competition with the expansion of the MTR network, not to mention the ride-sharing service Uber.

Taxi Council chairman Hung Wing-tat says the industry, made up of taxi companies, cab owners, agents engaged to rent and maintain the vehicles, individual owner-drivers and driver associations, has operated as disparate units – like a “pile of loose sand”.

So the industry-developed app is something of a historic development, says Hung, also an associate professor at Polytechnic University specialising in public transport policy.

Consumers already had a choice of more than 10 taxi apps – including HKTaxi and Kuaidadi (backed by Alibaba, owner of SCMP Group, publisher of the South China Morning Post) – but none of their creators were related to the business. The app, released last week, will provide better service than the pre-existing ones, says Sonia Cheng, associate director of Chungshing Taxi, a company represented on the council.

The council’s app, however, enables users to rate the registered drivers answering their calls, and the council pledges to investigate all complaints “to see whether it’s misconduct or miscommunication”.

It is designed to help improve taxi services, which will benefit both commuters and drivers, Cheng says.

Highly rated drivers will not only receive cash rewards or petrol coupons, their high ranking in the system gives them better chances of taking passengers. Those persistently receiving bad reviews will be required to undergo retraining, and recalcitrant drivers may be struck off the platform.

Of an estimated 60,000 taxi drivers in the city, 40,000 are full-time, and the council aims to register at least a quarter of them.

Taxi will offer some welcome clarity to drivers such as Frankie Lo Chi-fung, who has signed up with several free cab-hailing apps.

He has received orders through them, Lo says, “but I never know who’s behind these apps, which seem to earn money from advertisements. The new app comes from the industry, so things can be clearer.”

Lo started renting a taxi two years ago after closing his ailing machinery business. But it’s tough making a living as a cab driver in Hong Kong’s cooling economy, he says, and drivers often band together to try to rally more business.

“We form taxi clubs, each with about 300 drivers. Some clubs charge full fare, while others give 20 per cent discount. Usually, eight drivers are in charge of taking calls in one club and they transfer orders to anyone who can do it. Such private clubs are the most useful, as users are mostly loyal customers.”

The number of taxi drivers has shrunk from a peak of 80,000 in 2003 to the current 60,000.

The number of taxi licences has remained at 18,138 since the government stopped issuing new ones in 1994. Because licences can be transferred and traded, their price rose rapidly. But in recent years, this has also been on a slide: urban taxi licences now trade for less than HK$6 million compared to HK$7.2 million last year, while licences for New Territories green cabs fell to less than HK$5 million from HK$6 million in the same period.

Cheng Kai-shing, one of the city’s few owner-drivers, finds it increasingly tough going.

“The MTR reaches many more places than before. Ten years ago, a tyre cost HK$200, now it costs

HK$650. Insurance cost rose from HK$9,000 to HK$25,000,” he says. “Compared to when I joined the industry a decade ago, it’s very difficult to be a taxi driver now.”

Whatever the other challenges, the taxi industry clearly needs to improve the quality of its service: the number of complaints against drivers grew to 10,359 last year, 30 per cent up from five years ago.

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Refusal to take passengers was the most common gripe, accounting for 30 per cent of the total, although two-thirds of them could not be investigated for lack of evidence or because complainants refused to testify in court.

Transport sector legislator Frankie Yick Chi-ming says the government should be tougher on drivers whose bad behaviour (selectively picking up passengers, taking a longer route and the like) damages the reputation of the taxi industry.

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“Courts just fine errant drivers a few hundred dollars, and the police never appeal the sentences. It is hardly a deterrent to repeat offenders,” Yick says.

However, cabbie Frankie Lo reckons some of his colleagues may not be refusing passengers because they are looking for more lucrative fares.

“Some old taxi drivers don’t even know how to use mobile phones, or what GPS is. They usually stick to Hong Kong Island or Kowloon. If a passenger who doesn’t know the route asks the driver to go to Tuen Mun or Tin Shui Wai, he would refuse simply because he doesn’t know the way.”

With the age of taxi drivers averaging at about 60 years, the industry faces a greying workforce. Most young people prefer to work as lorry or bus drivers, which pay better than the H$15,000 that most taxi drivers earn each month. (Except for a few owner-drivers, most rent their vehicles from taxi companies on a shift basis).

Meanwhile, the image of local taxis is also undermined by its ageing fleet: 80 per cent of the 18,000 vehicles are at least five years old, most of them four-seater Toyota sedans.

That’s mainly because taxi companies lack incentives to upgrade their vehicles, Hung says.

“In Japan, taxis are phased out after five years. Hong Kong doesn’t have this requirement so taxis are ageing very seriously here. Owners aim to maximise profit, so they won’t take the vehicles for repairs until they cannot move.”

Chungshing, which manages 1,000 taxis, about 200 of which are its own vehicles, is among the companies seeking to upgrade its fleet. Last year, the company added 74 wheelchair-friendly vehicles which it calls SynCabs.

Passengers are charged a fee of between HK$30 and HK$80 to book the spacious SynCabs through an app or call centre, but just pay the standard fare when hailing them on the road.

Consumer response has been lukewarm despite the reasonable charges, Cheng says. Some people mistake them for Diamond Cabs, the service for disabled passengers which charges at least HK$115 per ride, and are reluctant to flag them down.

To ensure SynCab drivers’ earnings are comparable to those of drivers of regular taxis, Chungshing has been subsidising rental of the vehicles, causing it to run up a HK$5 million deficit.

Nonetheless, Cheng says the company remains on the lookout for suitable vehicle models to upgrade its fleet, including a hybrid Toyota due to be released in 2018.

“If there are more taxi brands, the public will have more choices,” she says.

Hung believes a lack of choice in the type of taxi services is a factor in the industry’s difficulties.

“There are taxi choices all over the world. But Hong Kong has only one,” he says.

For example, passengers can pick from standard and high-end taxis in Singapore and there is a choice of three in South Korea: cheaper cabs, those with experienced drivers and big taxis that allow for fare negotiation.

Although the industry has been fighting for more than 10 years to introduce premium taxis, the government has not issued any new licences in three decades other than the 25 given recently for blue taxis on Lantau, Hung says.

As the growth of the Uber luxury fleet shows, he says,“there’s clearly demand for [premium services] and taxis can definitely do that too”.

According to a Transport Department spokesman, in response to public views the government has given priority to taxi services in its ongoing Public Transport Strategy Study, due to be completed at the end of the year.

The study will review the roles of various services in tandem with the rail network, to ensure balanced and sustainable development of public transport. A “key area of study is the feasibility of introducing premium taxis”, the spokesman says.

Cheng of Chungshing Taxi complains that the administration has long neglected the industry and left drivers to their own devices. Even requests over basic issues such as a lack of pick-up and drop-off points for taxis, are not addressed.

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With more legal pickup points, the public won’t need to step into the road to hail taxis. There are fewer taxi stands following the expansion of the MTR network, when there should be more. Many people who get out of the MTR need taxis to finish their commute.

“We have taxis for the disabled. But there’s no special access for disabled passengers at the airport.”

As Hung sees it, the future of the taxi industry depends on the government.

“People need taxis, which are a form of public transport. But the government hasn’t fulfilled its responsibility in ensuring a level playing field. The operation of Uber is in question and the trial against Uber drivers is ongoing. Light-goods vehicles run by GoGoVan are also used to transport people, which is illegal. The government should do its duty as a regulator.”

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