22 March 2014

Bangkok's taxi problem: Are mobile apps the solution?

It is a perennial topic of grievance for the citizens of Bangkok, and the set-up is all-too-familiar. It is the evening rush hour, and you are trying to find your way among the throngs of commuters travelling in this city of 10 million. It might be the lack of public transport leading where you need to go, you might be unfamiliar with the neighbourhood, or just are in a hurry. But you decide to take a taxi. After several brightly coloured cars pass by, all with passengers, you successfully flag down one with red lights behind the windscreen indicating a vacancy. But when the driver hears where you're headed, he simply shakes his head, refusing to go. You sigh in frustration, but know it's useless to argue, and so try to patiently wait for another cab to come by. The same exchange is repeated a few more times. When one driver finally agrees, you end up gratefully thanking him for upholding his end of the bargain, something which should have gone without saying in the first place.

Such scenes take place daily throughout the city, probably in the thousands. Everyone seems to have been the victim of such refusals. Online communities are rife with criticism and complaints. Discussions regularly pop up on popular discussion forums. Twitter is abound with one-liners featuring fanciful revenge scenarios against passenger-denying cabbies and their lame excuses. The press has periodically picked up on all this anger. All to no avail.

It's not that the authorities are unwilling to accept the problem or that they haven't tried to better enforce the law (denying passengers is illegal, according to the Motor Vehicle Act, B.E. 2522). Rather, there hasn't been much choice in terms of actions that could directly benefit either passenger or driver. Take the Department of Land Transport's hotline, tel. 1584. The complaint-lodging system has existed for years, but with few people bothering to actually report the transgressions they witnessed. Awareness campaigns have done little to promote its use. This is probably because any action taken against the reported drivers remain invisible to passengers, most of whom have little faith in the system to begin with. For them, given the lack of assurance that their feedback produces results, the cost of their phone call is unjustifiable. The system is also prone to abuse. With no evidence required, false complaints can easily be submitted, though moving to better secure the system would further reduce its use.

Other initiatives have also arisen in attempts to fill this void. There are mobile apps that streamline the complaint-lodging process and websites that aggregate openly accessible feedback for individual taxis. However, such attempts haven't proven helpful, either. For user feedback to be of any use, it must be able to directly influence the future selection of cabs by other passengers, thereby rewarding good drivers and punishing bad ones. But there is a disconnect between the availability of feedback and the way we actually pick taxis, which is essentially a lotto, depending on who happens to drive by at that moment.

This is where mobile taxi-hailing apps come in.

The spotlight has been on hired-transport apps this past month. The international expansion of Uber and the regulatory backlash against it, as well as the scuffle between competing taxi apps and authorities in Beijing and Shanghai, show how big a role these apps will have to play in shaking up the workings of this relatively stagnant market. While Uber, a quasi-luxury service that connects passengers and drivers for rides, launched with fanfare in Bangkok earlier this month, two other regular-taxi apps have been operating since late last year, and are growing. Easy Taxi is based in Brazil and operates in 26 countries, while GrabTaxi is local and covers several cities in Southeast Asia. Both of them are currently focused on streamlining the cab-hailing process, providing real-time updates and contact info. But there is still also much potential for expansion in other areas.

These apps currently rely on driver and vehicle screening to achieve a certain standard. This effectively creates a small pool of quality taxis to offer passengers, which works, to a degree. As adoption rates grow, such assurance of quality will become increasingly difficult, and it will be essential to employ some form of user-generated feedback. These apps are in the perfect position to bridge the aforementioned gap between feedback and future rides. Whereas passengers have neither choice nor information when flagging down a taxi on the street, hailing through an app can provide them with both, potentially allowing them to avoid poorly rated drivers. Earlier digital taxi-hailing initiatives such as Governor Apirak's "smart taxi stands" failed in part due to both passengers and drivers not honouring calls. Feedback systems, combined with the increased accountability of hailing through apps, could help address this.

The greatest potential benefit of mobile-hailing apps, however, lie in how they can improve the efficiency of the market. By providing information and conveniently connecting passengers to taxis, they can help reduce the huge transaction costs normally involved, not least by cutting the time cabdrivers would otherwise spend roaming the streets with empty cars. One can easily imagine these benefits mounting as popularity of these apps increase and their underlying systems become more sophisticated. Providing passengers with the nearest cab is a start. Implementing a feedback system is but a step further. A well designed system might soon be able to match passengers and drivers in a way that maximises all parties' interests, e.g. identifying the driver most willing to go to a passenger's destination. This may even eliminate the root causes that created the problem in the first place.

There are many more ways mobile taxi-hailing apps could transform the market. However, not everybody today owns a smartphone. Considerations still need to be given to fairly balancing the provision of services among app-users and those who would rather opt to flag down a cab the traditional way. As seen from the cases in China and elsewhere, drastic changes to the system are likely to be at odds with regulations designed for an earlier era. Eventually, formal changes will be needed. But there is still much room for growth today.

And I am hopeful.

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