Wednesday, September 10, 2014

Uber's Ruffling of Feathers

Uber arrived in Malaysia not that long ago at the end of last year and has gained popularity in the space of a few short months. It's popularity has rattled the balls of many Klang Valley taxi associations and drivers by cutting through the competition by offering much more better services than these associations. It has delighted many users in particular because of the opportunity for them to choose the car of choosing, better fare, booking and pay by mobile technology and most important of all, a complete guarantee that there will be at least one vehicle that will come to the pick up point where you will be.

Some of us have recalled that Kuala Lumpur was ranked by TripAdvisor the third in the world with the worst-taxi drivers based on observations by tourists who visit the city there. Aside from them, even locals are not even spared from the problems that ranges from:

a) Price haggling, with the cab driver would throw a huge figure to reach one place, more for tourists, especially in towns and other cities outside Klang Valley that don't use meters. From my understanding, how they count is based on the estimate distance and mentally calculated with either the rate (not sure is the latest or the one five years back) + small margin of profit. In the end, you, as the customer still overpay.

b) Some of the taxis can smell smoky (if the cab driver is a smoker) and sometimes cabs that you go in, especially the older ones are quite dirty at times.

c) Picky drivers - the bane of passengers. Some will say, I don't know where it is, or outright, no I am not going there, etc. 

d) Even there are crime-cases involved taxi drivers, especially rape and rob cases where passengers were taken for a ride and then either raped (especially females) or robbed.

Despite these issues being highlighted to the tourism industry and to the worldwide travel media, well, many of those there still couldn't take it well and may have screamed "you are bias at us" or other sorts of expletives. Then again, how the usual taxi driver attitudes act to their potential passengers was what caused the negative perception and ranking there, even if they spot a proper uniform or a proper taxi car. 

Before Uber reached our shores late last year, MyTeksi was one of the taxi apps that will allow you to book from the place you are to the place to go. It was no doubt the best avenue to go as it adheres to the meter system, during my one week of work without a car. In December 2013, I had to leave my car at a workshop for about 5-8 days for a repaint job. Knowing of how usual taxi drivers would respond when you flag them from the shoulder of the road, I decided to use that app to have a taxi sending me to my client's office or to my home or other places for that weekend itself.

It's about 80% useful. The only issue with them is that sometimes there are no responses from any potential cab drivers who are within the vicinity of the place. At one time, after work it took me about 8-10 attempts before a response was made. On one occasion, a potential taxi driver aborted the agreement when he admitted that he was unable to turn into the road leading to my office due to a bumper-to-bumper crawl in front of G Tower.

I had two friends who loved Uber so much. One even told me that by getting pick the car he wants to ride on, he gets to show off to other of his friends that he can come to some nice social event (e.g clubbing, event hosted at a hotel) in a very nice big car like a celebrity.

Another one felt that Uber was better because it will come to pick him at his working place no matter how bad is the traffic heading there, as he has to shuttle back and forth to a few branches he has to supervise when necessary like in Bangsar, TTDI, and Bukit Damansara.

Looking at the rate of Uber X and Uber Black, the cost of 0.55 per kilometer, with a base fare of RM 1.50 definitely makes people think that taking this service saves the cost by a certain margin. The diagram here (by shows the comparison:

The launch of Uber X has got a lot of people excited and in admission, because of it's cheaper rate, resulted in overwhelming response, Uber told its drivers in the Black-car-class category to pick up X-class customers, something that a few parties are a bit dismayed off. Note that Miami is one of the cities in the States that does not allow Uber.

According to some driver forums, UberX trips tend to be shorter and thus the per-ride fairs are lower. Further, the rates, minimum fares, and Uber commissions are different for each of these tiers. Even if the result is more trips per hour, and thus more total income, this change looks to many like a bait and switch that forces drivers to do significantly more work for the same (or marginally more) pay. 

There’s also the problem that UberX and Uber XL attract a different customer demographic than do Uber Black and Uber SUV. So for a some who chose to drive for Uber expecting a high-end experience, this new program often means something far different. However, Uber's requirement with these drivers is that the passenger acceptance rate has to be at least 80 percent or more, with the highest performers rate is at 97 percent at most.

Ah, the threshold acceptance rate could something that was missing from either SPAD or the taxi companies. In Ireland, the transport regulator had no objections to its use as long it sticks to their rule of thumb, which is that their rates cannot be more than what is permitted there. SPAD has a legit reason to be concerned with because of the past episode of "taxi sapu". In the years prior to the launch of MyTeksi, this case has been prominently spotted not just in KL but in Georgetown as well. More than ten years ago, these cabs ply their trade around Komtar, asking for passengers but without spotting taxi paint and meter that a passenger might not be aware of. Such memory like that is what regulars of taxi may be worried about.

It is also taken into account that some taxi drivers had to do it considering that they do not, at this point of time have the ability to own individual licenses to operate their own taxis. Bear in mind that they out of the total fares collected per day, a large portion has to be paid off for the daily rental of vehicles from their cab cartels. Some will have to go along with the cartel lines despite disagreeing to that on the individual capacity lest deemed insubordination by their organization. 

Uber is no doubt a double-edge sword in Malaysia. Uber should continue to have more sessions of talking and shouting with SPAD. SPAD to my opinion is more of the moderator, but the real party that Uber has to faced here is the taxi cartels.

But to scream that Uber cuts away a slice of a pie shows two things in a nutshell:

a) Our taxi cartel and service is not confident of giving a solid competition with a new kid on the block
b) There isn't any willingness to provide another option of the taxi transportation especially during desperate times.

You may want to picture yourself in the worst-case scenario when there is no taxi or bus coming in the area due to extraordinary circumstances while your mouth foams about Uber.

See also SPAD's press release statement on Uber here (29 August 2014)

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