Why Singapore’s Taxi Uncles Aren’t Going Extinct

|Posted by | Columns

taxi-uncle-in-singaporeWith 2,400 taxis sitting idle, some might be wondering if Singapore’s taxi uncles are going extinct. But in reality, taxi uncles aren’t the ones in trouble.

Taxi hires are falling. According to the Land Transport Authority (LTA), the unhired rate (cabs not hired for use by taxi drivers) is at a record breaking 9.1% in 2017. This is almost double the amount from last year, and it means some 2,400 taxis are sitting idle.

However, it doesn’t mean that Singapore’s taxi uncles are about to go extinct. Here’s why:

Reason 1: Taxi Uncles Aren’t in Trouble; Taxi Companies Are

One thing to understand about taxis is that cab drivers aren’t really employees. They don’t get a fixed income from their company. Rather, they are customers themselves.

Cab drivers pay a daily rental rate to use the taxi, and they can keep whatever fares they collect (although the fares and surcharges are set by the company that rents them the vehicle). This means that, with the number of unhired cabs rising, the ones who are really in trouble are the cab companies.

If the cabs are being unhired, that means it’s not profitable to drive at the current rental rates. If the cab companies lower their daily rentals – or allow for higher fares – the cab drivers will come back.

In the meantime, the taxi uncle has plenty of different options. There’s nothing to stop one of them from becoming an Uber or Grab driver, for instance. It’s not that their job is about to disappear; it’s likely that the companies they rent from or work for will be changing.

Reason 2: Singaporeans are Less Likely to Buy Cars in the Future

As far back as 2014, Minister Khaw Boon Wan raised the possibility that car ownership may go out of fashion in the future. This certainly won’t be a unique development, as it’s already true in many major metropolises; many people in cities like Tokyo or New York, for instance, don’t drive and may never buy a car.

In Singapore, cars are expensive (we are one of the most expensive car markets in the world), and it’s actually cheaper to use taxis, Uber, and Grab than to buy or lease a car.

However, there will always be a need for cars in some capacity. Sometimes it’s just not practical for us to use public transport, like when you have five pieces of luggage and are headed to the airport. This virtually guarantees that the taxi uncle will be around in some form in the future.

Of course, whether familiar cab company names like Comfort del Gro or TransCab will still be around is another issue (see reason 1).

Reason 3: Taxi Uncles Have the Best of Both Worlds

Taxi uncles have an advantage that private car hires don’t. Due to apps like Grab, they can both be called for, and still pick-up passengers on the road. That gives them the best of both worlds.

While most people these days call a ride on their phone, there will always be a side-of-the-road demand: sometimes you want a car that’s just passing by, or your phone is dead after an all-night party.

Taxi Companies May Not Go Anywhere Either

Taxi companies have faced disruption many times, in the decades this industry has existed. From the invention of monorail systems to cheap experimental cars, the industry has often been said to face “the end”.

But the time of driverless cars is still (probably) a decade or more away; and even then, some people will prefer the flexibility of a human driver.

It’s likely that the taxi uncle won’t go extinct, but rather, will undergo a change: the taxi companies of the future will operate more like Uber and Grab do right now.

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Ryan
By Ryan Ong
Ryan has been writing about finance for the last 10 years. He also has his fingers in a lot of other pies, having written for publications such as Men’s Health, Her World, Esquire, and Yahoo! Finance.