TAXI vs GRAB: Who Is The Real Enemy?

By Dr. Shen Goh

Many taxi drivers blame Grab (or Uber) for the downturn in their business. With fewer passengers and lower fares, taxi drivers are seeing unprecedented threats to their livelihood. Their reactions have ranged from boycotting Grab to lobbying the government to outlaw Grab. Neither will work, and taxi drivers who fail to see this are failing to see who their real enemy is.

The Economic Enemy

The advantage of Grab is its ability to match up drivers with passengers who are at the same location or heading in the same direction. This saves drivers travelling time and petrol costs, both of which translate into economic savings in lower Grab fares.

Taxi drivers, on the other hand, insist on waiting at their station until called to fetch a passenger. A taxi driver stationed at a hotel in the city will naturally charge for his time and petrol when driving to fetch a passenger at our Curtin campus, both of which translates into higher taxi fares as compensation.

But why should passengers have to pay for how far a taxi driver had driven in order to fetch them? After all, do taxi drivers likewise have to compensate for how long a passenger had to wait to be fetched?

This one-sided calculation of expenses is why taxi drivers are losing passengers to Grab.  Insisting on an archaic system of driving to fetch passengers means that taxi drivers are continuing to pass the expenses of travelling time and petrol costs onto passengers even though there is now a better alternative. Why should passengers pay to solve a problem created by taxi drivers themselves?

The more that taxi drivers argue that their higher fares are justified compensation for their time and petrol, the more that passengers are reminded of how long they waited and how much the environment is being destroyed. No wonder the modern back-packing and tree-hugging passenger is eschewing the inefficient and un-environmental friendly taxi for Grab!

The Legal Enemy

The disadvantage of Grab is that it is less regulated (for the time being) than the taxi industry. This supposedly means that taxi drivers are safer due to their professional licences and experience.

Taxi drivers who believe that their higher fares are justified compensation for their professional licence are ignoring the important fact that most passengers also possess a driving licence. Such passengers will not accept the insulting proposition that they are amateurs tootling about dangerously while taxi drivers are experts chauffeuring with professionalism, and that they should pay a premium for the difference.

If it is true that the driving skills of amateurs are that much inferior, one must wonder how much use is a taxi driver’s expertise when all the other amateur drivers on the road are bound to crash into the taxi anyway?

Passengers are more likely to accept that the logical proposition that the government would not allow unsafe drivers on the road and that obtaining a driving licence is enough evidence of their competence to chauffeur their children to school, grandparents to hospital, or friends to the movies.

So what is there to stop such passengers from becoming Grab drivers and chauffeuring others as well? Even if Grab drivers do not value the safety of strangers as much as that of family and friends, one would still expect a Grab driver to drive safely in order to protect his own life and vehicle!

The more that taxi drivers argue that their higher fares are justified compensation for their industry being more regulated than Grab, the more that passengers are reminded of the difference in mentality between the two industries: taxi drivers see their professional expenses (vehicle, licencing, insurance) as fares to be recouped from passengers; Grab drivers consider their expenses to be personal and their fares as extra pocket money. If the difference between the two industries was truly a disadvantage of Grab, one must ask why passengers are choosing this disadvantage? Obviously, it is not a disadvantage; or, at least not one that passengers care about.

The economic and legal enemies above are what many taxi drivers need to face. Then and only then can they understand the true causes of the downturn in their business in order to react with effective solutions that will protect their livelihood.

Dr. Shen Goh is a Canadian lawyer lecturing on business law at Curtin Malaysia. Prior to Curtin Malaysia, she was a lecturer in the Faculty of Law of York University, Canada. Her research interests include intellectual property, branding and international trade.