SMRT Taxis May Be Up For Grab: What Does It Mean For Your Taxi-hailing Days?

SMRT Taxis May Be Up For Grab: What Does It Mean For Your Taxi-hailing Days?

Quick!
Hail an SMRT taxi and take a selfie with it, for this may soon be a snapshot tinged with sepia-toned nostalgia.

SMRT is apparently in talks to sell its taxi business to Grab, and if all goes through, it won’t be long before the familiar SMRT taxis vanish from our roads.

What’s the Deal?

SMRT or GRAB?

Why is SMRT selling its taxi business anyway?  Well, it seems that Temasek, its holding company, wants SMRT to get its act together and focus on the rail business to make the MRT and LRT lines reliable, just like they have been… many, many years ago.

Not only that, Transport Minister Khaw Boon Wan has also set a new reliability target, which will be a 72% improvement over the previous years.

With pressures to ‘Make The MRT Great Again’, it seems that selling off smaller and less profitable businesses is the way to go.

Grab, on the other hand, is the start-up darling that has given Uber a tough run for its money not just in Singapore but throughout Southeast Asia.

Earlier in the year, it had already been announced that SMRT taxis will have an exclusive partnership with Grab, where all SMRT taxi drivers will use Grab as the sole ride hailing app for its taxi bookings.

With such a close partnership already in place, it wouldn’t be a surprise that should SMRT want to sell its business, it’s Grab that’s got the ink on the dotted line.

Potential Job Losses

It seems that talks have hit a roadblock in terms of employment. While SMRT wants the buyer to ensure that there will be job retention for all employees who are affected, Grab does not seem quite as eager to do so.

It isn’t clear how many employees there are in SMRT’s fleet of over 3,500 taxis as well as its sale of diesel to taxi hirers.

Nevertheless, if SMRT is serious about selling its business, it is unlikely that the deal will fall through should Grab or other interested buyers not take up the full headcount.

More likely, there will be rounds of negotiations to limit the number of job losses.

What Does it Mean for Consumers?

1. Possibly Reduced Waiting Times and More Competitive Fares

The sale of SMRT’s Taxi business to Grab will give the latter a great boost to its capacity and for users of Grab, this definitely means greater availability of a taxi when you need one.

Grab’s JustGrab app that was launched at the end of March combined about 50,000 fixed-fare taxis from its taxi company partners and private-hire cars on the same platform.

If SMRT does sell its taxi business to Grab, it is likely that all of SMRT’s fleet will be using this app, which uses a dynamic pricing option that is based on supply and demand. With more supply of taxis, not only will waiting time be reduced, but fares could be more competitive as well.

According to Grab, the app has already reduced waiting times from five minutes to about 3.7 minutes.

2. Street-Hailing Will Become a Challenge

On the other hand, this probably means fewer taxis on the road that you can hail the old-fashioned way – by sticking your arm out.

While this may not be such an inconvenience to many Singaporeans who are never seen without their smartphones, being able to hail a taxi without another device but your arm is something that’s still appreciated by many others, particularly the elderly and people who have difficulties using technology.

With taxi drivers moving from one booking to another, street-hailing will become more of a challenge.

3. The Competition Gets Fiercer

As the taxi industry continues to see changes and disruptions, this means that commuters have greater options when it comes to the type of pricing they prefer.

Grab’s potential acquisition of SMRT taxi is a sign of just how much the taxi industry has changed in recent years, and with fiercer competition, customers get better options.

With metered fares still in use and dynamic fares becoming the new way of taking your taxi, ComfortDelGro, Singapore’s largest taxi company, has also responded to Grab’s app.

On its booking app, the company launched a flat-fare option in addition to a metered one, which means that you don’t have to pay more for heavy traffic.

As Grab continues to disrupt the market, we can only expect greater competition and more consumer options. As of now, we should ‘Grab’ the opportunity by applying for credit card with cash back up of 20% on Grab rides!

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SMRT Getting On the Right Track

While talks of the sale of SMRT Taxis is still something that’s quite in the air at the moment, it seems that SMRT is on its way to being an operator that focuses on providing a service to the public.

Its de-listment from the market at the end of last year has freed it from the pressures of being accountable to private interests.

With a greater focus on improving rail reliability, the sale of smaller businesses in its portfolio shouldn’t come as a surprise, and public transport users can look forward to commuting with less drama and more efficiency.

 

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