TAXICABS FACE DISRUPTIVE TECHNOLOGY FROM UBER Drivers wait for passengers on Highway Drive in Makati City. RICHARD REYES
The last few months have been tense for the Philippine operations of Uber Technologies, which is behind the wildly popular taxicab alternative application “Uber” that can be downloaded into smartphones.
But the San Francisco-based company’s brief tussle with transportation regulators, prompted by complaining taxicab operators and countered by the overwhelming tide of public opinion favoring the app, may mean one thing: that Uber is here to stay.
That’s good news for regular users like Maria Arlyssa Narciso, who was left with a hair-raising experience following a Dec. 6 taxicab ride using a smartphone booking app and Uber rival.
Narciso, who works at Bank of the Philippine Islands and owns online crafts store Happy Buttons, said she was making the trip from Cainta, Rizal, to Shaw (Uber only operates in Metro Manila today) when she discovered during the trip her clean-looking cab was carrying some unwanted guests.
Pest
“To my horror and surprise, I felt and saw a small cockroach climb on my foot. I swiped it off and stepped on it immediately. Then suddenly a swarm came out from under the backseat,” Narcisco recounted.
“I asked the driver if I can just pay and get off before my original destination because there were just too many cockroaches. He said sorry after,” said Narciso, who ended up booking an Uber vehicle.
This is just one of several stories of passengers complaining about the poor way taxicabs are maintained—one reason for their preference for Uber.
That, however, is a particularly contentious topic for taxi operators. Uber vehicles are privately owned and are not subject to stringent regulations, and the costs that come with these explain why some cabs fall short when compared with Uber cars, they said.
Platform, not transpo firm
Uber, which was formally launched in the Philippines last February, likes to stress that it is not a transportation company but a platform that allows passengers to link up with drivers of private vehicles looking to make extra cash.
Transactions between passengers and drivers are credit card-based, allowing an extra layer of security and convenience for that relatively small part of the population with this kind of access.
One of Uber’s main draws is its ease of use. A rider downloads the app, registers and he or she can begin by selecting the service, setting a pickup point and then being connected to a nearby driver, whom the passenger can call or text. (See sidebar, How to use Uber.)
Vehicle tracking, new cars
The Uber platform also allows vehicles to be tracked via satellite, allowing users to let friends and family monitor their route and exact position.
Safety features like these drew Louie Rey, a Senate employee, to Uber over the last four months. Uber drivers use “new” and have well-maintained cars and are “courteous,” helping boost the experience, he said.
“What I don’t like with the taxi is that usually the car is dilapidated, the air-con is not functioning properly and the driver complains,” Rey said.
Rey’s typical Uber journey going home from work involves fetching his wife in the Makati financial district before heading to SM Group’s Mall of Asia complex in Pasay. There, Rey and his spouse take a commuter van the rest of the way to Cavite, where they reside.
“Unfortunately, Cavite is not yet covered by Uber. If it is, then we would use Uber on a regular basis,” he said.
Predictability
Uber’s predictability is also a key feature. For business owner Elliot Artuz, knowing how much his fare will cost for a desired destination makes Uber a good taxicab alternative.
“There’s no need to negotiate any rates,” said Artuz, who owns and drives his own car but occasionally uses Uber, especially during emergency situations. “You’re assured that the driver won’t cheat.”
Some cab operators have been known to resort to “contracted” or fixed rates before accepting a passenger. Many passengers end up agreeing to these rates, which are usually higher, because they are running late.
Rey recounted a recent incident when a cab driver asked for P250 for a trip from Pasay Rotunda to Ninoy Aquino International Airport, where he and his spouse had to catch a flight.
“Of course we ended up booking Uber for a lot less fare of P70,” he said.
In other stories, the passengers were less fortunate as indicated in news reports on taxicab drivers allegedly raping or robbing their victims.
Rare cases
But Jesus Manuel “Bong” C. Suntay, president of the Philippine National Taxi Operators Association, said these reports often left out the fact that these were very rare cases and should not be used to cast the entire industry in a negative light.
“There are 27,000 franchised taxi vehicles in Metro Manila—that translate to more than a million passenger pickups per day,” Suntay said, noting that the complaints per day were relatively small compared with the size of the sector.
Nevertheless, Uber’s “disruptive” business model has been successful because it has correctly identified the demand for better and safer transportation alternatives.
UberBlack, UberX
The company has even tailored its services further, giving riders the option to link up with drivers using more high-end vehicles with the “UberBlack” service or the more affordable “UberX.”
Its website showed that Manila UberX vehicles include models like Toyota Vios and Honda City, with the base fare pegged at P40, plus a per minute charge of P2 and a per kilometer charge of P5.70. A passenger can cancel the ride for P100.
Vehicles for UberBlack, whose base fare is P90 and the per km charge is more than double that of UberX at P12.92, includes the larger Toyota Fortuner and Ford Everest. Other UberBlack vehicles include Subarus and Mini Coopers, making this option a “classier” way to get around Metro Manila, one regular rider said.
200 cities, 51 countries
Differentiated services like these have helped Uber grow worldwide at breakneck speed. It started in 2009 and is now present in over 200 cities and 51 countries. [Recently, several countries, including India, have banned Uber.]
Recent reports indicated that the company could be worth as much as $40 billion, based on a fresh round of fund-raising. To put that in perspective, Uber was worth around $17 billion last June, indicating how investors feel about the company’s prospects.
The growth story appears to be just as rapid in the Philippines although Uber did not disclose any figures.
Protests
“In Manila, the response we have received both from riders and drivers has far exceeded our expectations and we continue to see tremendous growth,” Karun Arya, Uber communications lead-South Asia, said in an e-mail.
As in the Philippines, Uber has been met with several protests, mainly from taxicab operators in other parts of the globe.
The arguments were similar: that the company is operating illegal taxi operations, is unfair to regulated industries and even compromises passenger safety, including a recent case in New Delhi, India, where a female passenger alleged she was raped by an Uber driver.
“Uber as a tech company admitted that they don’t own any vehicles and don’t employ any drivers. Taxicab operators, on the other hand, are required to own their vehicles, employ their own drivers, secure franchises and pay regulatory fees,” said Suntay, adding that fares are regulated for taxicabs but not for Uber.
With costs adding up, it would take at least five years to get their money back on a single cab, meaning they would need to use the vehicle for a longer period to earn profits, Suntay said.
He noted that while this explained why certain taxis were “old” and continued to operate, they were not making excuses for operators.
Level playing field
“The only thing we are asking for is a level playing field and for Uber vehicles to be regulated,” Suntay said.
The controversy is not limited to its business model.
The company was recently criticized in the United States over comments reportedly made by one of its senior executives on how the firm could finance smear campaigns against critical journalists and how Uber workers could access customers’ private travel information.
Uber has distanced itself from those comments, saying that employees are prohibited from accessing a rider’s private data.
Arrest, netizens react
For a time, Uber’s model has stayed below the regulator’s radar. But things came to a head last October when the Land Transportation Franchising and Regulatory Board (LTFRB) announced that an Uber driver had been arrested in a sting operation.
The driver was reportedly fined P200,000—which is the applicable amount for operating that vehicle without the necessary government franchise.
That act drew widespread condemnation, mainly directed at the LTFRB and taxi operator groups that lodged the complaints. The criticism came loudest from netizens who cited the shortcomings of government-regulated services.
Damage control
Within a week, the transportation department launched some “damage-control” initiatives and said it was keen on working with Uber and other technology-related solutions to improve transportation conditions for passengers.
Transportation Secretary Joseph Abaya later followed this up with a stronger statement aimed at taxicab operators.
“Commuters say they feel safer taking these private vehicles for hire, that the fleet are newer, that app services are faster and more efficient. So why put a stop to what is clearly for their benefit? Poorer services should be upgraded to match their competition—not the other way around,” Abaya said.
“So, my advice to taxi operators: modernize, innovate, and improve your systems and services,” he added.
Some operators of public transport vehicles understood how Uber’s model was attractive even if it was hurting their business.
Long wait for franchises
An individual, who runs a UV Express business but declined to be named since he has pending applications with the LTFRB, said the difficulty in securing franchises and long waiting time meant that operators were losing money before their cars could leave the garage.
Others end up operating ahead of their license, which would make the vehicles colorum or illegal, while others turn to Uber.
Uber’s Arya said this shift was a global trend.
“New drivers can start their own small business and existing transportation providers can increase the utilization of their time and their assets, and enjoy added flexibility. In fact, in cities around the world, former taxi drivers are choosing the Uber platform for these very reasons,” he said in his e-mail.
The Philippine government, meanwhile, has since been playing catch-up in terms of its rules.
Hearing
Last Nov. 24, the LTFRB held a formal hearing that included representatives from Uber and other taxicab alternatives as well as from the taxi groups themselves.
LTFRB Chair Winston Ginez said that the board would need to review position papers filed by all stakeholders before its revised guidelines accommodating solutions like Uber and other technology apps were out. Early on, the regulator identified the existing vehicles-for-hire category as the likely classification for Uber cars.
Ride-sharing app
No new arrest has been made since October even as the LTFRB has warned private drivers that they can charge money for these applications before the rules are out “at their own risk.” In fact, more players are entering the market. Last month, Tripda, a ride-sharing app under Germany’s Rocket Internet focusing on carpooling, was launched in the Philippines.
For BPI’s Narciso, taxicab operators have the upper hand today because of their bigger numbers in terms of cars, but services like Uber will continue to eat into their share as long as the market demands it.
“It’s a free market and consumers are paying. Why should they and the taxi operators take that away from us? It’s a healthy competition. It pushes them to innovate and improve their services,” Narciso said.
“It shouldn’t always be about profit since those [taxi] units in the metro are poorly maintained anyway. I’d let them take the profit if I get the quality of service that I’m paying for,” she said.