27 May 2019
Ride-hailing platforms such as Uber offer a better alternative for passengers dissatisfied with the poor service provided by taxi operators. Photo: Reuters
Ride-hailing platforms such as Uber offer a better alternative for passengers dissatisfied with the poor service provided by taxi operators. Photo: Reuters

Time to open the market to ride-hailing platforms

Despite their growing popularity in many countries, ride-hailing services have yet to gain official recognition from the Hong Kong government, which insists on exercising its regulatory functions in the transport industry through its licensing authority.

Instead of the ride-hailing option, the government prefers to introduce a luxury taxi service that will bring more competition to the industry and meet the rising demand for higher quality service such as courteous and professional drivers and more comfortable cabins.

But with Hong Kong almost desperately seeking to achieve the status of a smart city, the government will only look foolish if it continues to put up roadblocks to car-hailing services, which present the best way to break the monopoly of a small group of taxi license holders and offer new business opportunities.

Two ride-hailing platforms – China’s Didi Chuxing and Singapore’s Grab – were recently reported to be planning to enter the Hong Kong market.

Didi is said to be in discussions with the government to see how to boost its business in the city on top of its existing online taxi booking platform Kuaidi. Currently, around 20,000 taxi drivers have registered with Kuaidi to receive passengers through a smartphone app.

Grab has yet to operate in Hong Kong, but it has appointed a public relations agent for this market, showing to everyone that it is serious about its plans to establish its presence here. 

The company currently operates in eight markets in Southeast Asia including Singapore, Malaysia, Indonesia, Thailand, Vietnam and the Philippines. Its services are not limited to taxis, but also offers private car, coach, shuttle bus and even “hitch” service which allows people who don’t know each other to hire the same private car to travel on the same route.

In fact, the same service is being offered by taxi drivers in Hong Kong. It’s called Pak Pai, and it’s illegal.

Earlier, the government launched a crackdown on Uber for operating in the city without a license, and many of its drivers were arrested. But despite the campaign, the ride-hailing service continues to do business in the city and it appears that its clientele is growing.

The reason is simple: Uber offers an option for passengers who want something beyond the service provided by existing taxi operators. Uber accepts credit card payments and runs on a complete technology platform that enables drivers to take the shortest route based on real-time traffic situation.

Uber also offers seven-seater vehicles, ideal for an entire family on an outing, who would otherwise have to hire two taxis and pay double fare for the same trip.

Clearly, the current monopoly of the taxi industry by a few license owners is one major reason for the inability of the sector to improve itself, and the government, by refusing to legalize car-hailing services, is perpetuating this malady.

Car-hailing services will continue to thrive in the city because the public needs them. What Uber is offering can be provided by other ride-hailing platforms. However, the government apparently refuses to recognize this, and is only interested in protecting the rights of a small group of taxi operators, who don’t want to dilute the value of their license which is now worth more than HK$7 million each.

Of course, amid widespread criticism of its service, the taxi industry has tried to improve itself. It has, for example, launched a smartphone app that enables passengers to call for a taxi.

But such an app lacks the support of a complete technology platform. It is a simple call center manned by an operator who uses a radio system to find an available taxi to take a client from point A to point B.

A smart transport app, on the other hand, uses the latest technology that allows the driver to find the less congested routes to arrive at the destination at the shortest possible time. Big data also helps a ride-hailing platform to adjust the number of its cars on the road to match the public demand.

There is no choice for the government but to break the monopoly of the taxi industry. It must legalize online ride-hailing services to allow new players to improve the service.

Hong Kong citizens deserve a better deal.

– Contact us at [email protected]


EJ Insight writer

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