Great for both passengers and drivers alike, local taxi companies appear to feel threatened by the appearance of taxi-booking apps.
One of Ho Chi Minh City’s leading taxi companies, Vinasun, recently expressed concern about the appearance of new taxi-booking apps such as Easy Taxi and Grab Taxi, which allow passengers to find a taxi without contacting an operator or dispatch centre.
Launched in Ho Chi Minh City earlier this year, Easy Taxi and Grab Taxi, the first of their kind, allow passengers to identify the nearest taxi and make a direct booking. The two apps are available on Android, iOS and Windows Phone, and detect the location of passengers and nearby taxis using GPS, then notify all taxis within a radius of five kilometres. Passengers include their destination and drivers reply to the request and the nearest to do so receives the booking. Driver data is also stored in the apps, so customers can retrieve any property they may inadvertently leave in the taxi. The apps aim to help passenger to quickly find a taxi, especially during rush hour, while drivers can reach more passengers in off-peak hours.
Easy Taxi, a Rocket Internet-backed app, is also available and operating in Malaysia, Hong Kong, Thailand, and the Philippines, and claims to have built a network of 730,000 drivers from major taxi companies in Ho Chi Minh City. Grab Taxi was reluctant to provide any specific figures but said it had spent a great deal of money on marketing campaigns by offering discounts of VND50,000 ($2.3) per ride for passengers. The two providers have similar apps and similar marketing strategies, but neither considers the other to be a rival in the emerging field. “We believe the entry of new players is good for the market,” said Mr Alexander Le, Managing Director of Easy Taxi Vietnam. “And it’s good for passengers and drivers too.”
Mr Nguyen Tuan Anh, General Manager of Grab Taxi Vietnam, said that for each 100 kilometres travelled taxi drivers collect fares for only 55 kilometres. “The app will help taxi drivers earn more and passengers can find a ride quickly,” he said. Income for taxi drivers in Malaysia using Grab Taxi have increased by up to 300 per cent each month. The company focuses on two social missions: ensuring drivers can earn more money and guaranteeing the safety of passengers.
Ho Chi Minh City’s two largest taxi companies, Mai Linh and Vinasun, have 2,800 and 5,500 taxis, respectively. While this represents an excess in supply over demand, service quality is low. Mr Le said that Easy Taxi focuses on engaging with taxi drivers, passengers and taxi companies, and this helps the company develop and expand its business model into the future. Grab Taxi, nearly two months after its launch, has announced expansion into Hanoi starting from May. Easy Taxi wouldn’t confirm an exact time for expansion to the capital, but indicated it would be soon. The two apps may face certain challenges in Hanoi, where there are a larger number of taxi companies if not actual taxis, but the app that fully reaches the market first will be at a distinct advantage.
One challenge Easy Taxi foresaw, which has come to pass, is a degree of opposition from the taxi companies. “We are trying to come to an agreement with some of the major local taxi companies,” said Mr Le. “It’s a new model and will face obstacles, and the taxi companies realise that.” Easy Taxi has proposed setting up a business plan with Vinasun, but is still awaiting a response. And it may have to wait a while longer, as the company has sent a letter to the Ho Chi Minh City Taxi Association (HCMTA) expressing its disapproval with the model and doubting its functionality. “Vinasun believes that the apps will affect its operations and image, with passengers and drivers having direct contact,” said Mr Phan Thai Binh, General Secretary of the HCMTA. “It may also trigger unfair competition.”
But taxi drivers VET spoke to in Ho Chi Minh City like the apps. Many have the Easy Taxi and Grab Taxi apps on their phones and recognise they help them to earn more income. “I carry more passengers by using the apps and save on petrol costs each day,” said Mr Dao Van Duong, a driver with Mai Linh. “Not only do I earn more but I can work less and go home early. With the app I once picked up a fare from Ho Chi Minh City to Ba Ria Vung Tau province [about 100 kilometeres], and I can now more easily reach the turnover the company insists I collect.” Mr Nguyen Van Tuan, a driver with Vinasun, is also happy using the apps. The taxi industry, he said, is all about turnover. Though Vinasun forbids its drivers from using the app, he and many others do so and “they really relieve the pressure of raking in turnover and they benefit drivers,” he said. “I’ll continue to use the apps, despite the fight between the app providers and the taxi companies.”
Relevant government agencies have no opinion on the apps at this time, according to HCMTA. There are now nearly ten taxi apps in Vietnam and as the country is a market of some potential the development of location apps it’s predicted that more new players will enter the market in the future, though it’s agreed that time is needed before they begin to turn a profit.