While the upsurge in the smartphone ownership has supported the utility of technological advances in the taxis industry, there is lack of awareness of how the platforms can improve taxi services in the metered taxi business. However, the gains of the Transportation Network Companies verify the advantages, thus the need for the comparative analysis. Convenience sampling was employed to recruit ten passengers and ten drivers residing in Bangkok. On management and operations, the results revealed that income was the primary motivation in drivers renting their cars. Unlike the medallion system that overlooks safety aspect, Uber scrutinises the criminological profile of all drivers. The TNC also have a feedback feature, where poorly rated drivers are suspended and deregistered from the service. However, the system errors are a source of dissatisfaction, as they are setbacks in usage and convenience. Some respondents continue to use metered cabs, citing the comparative advantages of more exceptional level of expertise and knowledge of the routes. The concerns confirm the need for learning, where TNC and Metered Taxis should adopt beneficial aspects from each to improve customer relationships. Policymakers should also enact laws and adopt regulations and rules that will allow all players in the business benefit from the technological advances.
Chapter 1: Introduction
Importance of this study
Taxis remain an accessible means of transport in many cities because of their convenience and flexibility. The acceptability of the service is evident in Bangkok, where taxis are the most preferred mean of transportation. However, the industry has remained vulnerable to challenges, with the primary aspect being practice issues. Meter taxis fail to meet the satisfaction test, a supposition that was evident between Oct 2015 and Jan 2016, where the Department of transport received 14912 online complaints on taxi services. Critical issues include careless driving, impoliteness, exploitative prices, and the insufficient supply of drivers. The elements come at an age when customer relationships are an essential competitive aspect, as they shape not only satisfaction but also loyalty among the target customers.
The inferior services exposed the medallion system, where it was affected by the market disruption of technology-driven Transportation Network Companies (TNC) that relies on applications installable on smart devices. One of the most dominant TNCs is Uber, which was first launched in 2009 in San Francisco. Unlike the metered taxis, cabs under Uber offers superior services and improves passengers’ experience. The firm operates in over 120 cities in 57 countries. Uber entered Bangkok in 2014 and commands a market share of 91 000 users. 80% of the proportion is Thai, and 20% are foreigners (Thai Tech News Blog 2016). Other TNCs operating in Bangkok are Grab Taxi (2013) and All Thai Taxi (2015).
This research investigates how technology acts to foster the relationship between the service providers and consumers. The focus is on TNC, handling the analytic question that explores the impacts of Uber in Bangkok, Thailand.
Aims and Objectives
To compare the system of management and operations between metered taxis services and TNC taxi service providers within Bangkok, Thailand.
To documents the consumer’s behaviour and user’s experiences on TNC Taxi service in Bangkok, Thailand
To indicate the problems experienced from utilising TNC taxi application and suggestions for areas of improvements.
Research process
The small-scale qualitative research investigates the impact of TNC, where ten passengers and ten drivers residing in Bangkok are the primary respondents. The key informants were recruited through convenient sampling. The snowball approach was adopted, whereby each respondent recommended another person who was also able to articulate his or her view on the topic area.
Data was collected between February and March 2018 from video call interviews that lasted for 15-30 minutes. The in-depth discussion allowed completeness of the responses. The recordings were transcribed into computer files, and data sorted into categories readings.
While the focus was documenting responses, ethical concern was also a critical consideration. The data collection was based on informed consent, where participating was based on willingness and not coercion. Confidentiality and privacy was assured, where individuals were not to appear in the subsequent report. The recordings were also deleted once the final report was written to prevent access by third parties.
The findings will be relevant in highlighting guidelines for regulating the TNC taxi industry and aspects for improving services.
Chapter 2: Literature Review
Overview
The section reviews the existing stock of knowledge in areas related to the phenomenon of interest. It explores the scholarly contributions on the comparison of the system of management and operations between metered taxis and TNC, consumers’ behaviour, as well as their feedbacks on TNCs taxi experience. Other aspects include problems encountered from using TNC taxi application, as well as areas of future engagement in the industry.
1. Comparison of the System of Management and Operations between Metered Taxis Services and TNC Taxi Service Providers
Technological utility and growth in the use of smartphone are the fuels that foster TNC operations. Unlike the traditional for-hire cabs, the TNC offers superior services, primarily because of the quicker response time and friendly nature of the drivers (Cramer and Krueger 2016, p. 165). In their comparison of the taxi systems in Hong Kong, England, the United States and China Chan et al. (2016, p.217) concludes that the mobile telephony helps in improving service delivery while at the same time reducing the negative car rates. The ease of installation of the application, convenient online payment, and efficiency in giving feedback is also a revelation of the revolutionary power of TNC system in the taxi industry. The findings are consistent with Cusumano (2015, p. 33), who note that TNC has fixed issues associated with traditional taxi drivers such as failing to meet the required service standards, passengers refusal, and unsatisfactory conduct.
Mulley and Nelson (2016, p. 4) point out that TNC is the future of the taxi systems. However, users are cautious in providing phone numbers and credit card details during registration, noting that the identifiable information may lead to privacy threats (Chan et al., 2016, p. 221). The application also posed a challenge to some drivers who are unfamiliar with the advance and found it difficult to use. Another setback lies in the high cost of investment into the development of the system (Chan et al. 2016, p. 241).
Cramer et al. (2016, p. 179) sought to compare utilisation rate in Boston, Los Angeles, New York, San Francisco, and Seattle. In their findings, they noted that the UberX was more popular and more preferred by passengers as compared to traditional metered taxis. The application-driven system provided flexible supply models and surged pricing all day long, and that matched demand and supply (Baron 2016, p. 23). Besides, meter taxis face ineffective rules and regulations regarding the provision of the services. These included but were not limited to public licensing and restricted service coverage. When compared to traditional radio call taxis, Wang et al. (2015, p. 148) noted that TNCs provided the customers with more reliable means of transport that was timesaving. Nevertheless, the research revealed the need for monitoring rules and regulations in regards to TNC operations and innovations that appeal to users.
2. Consumers Behaviour and Users Experience on TNCs Taxi Service
Since the introduction of TNCs, there have been varied reactions from the passengers. The report released by Rayle et al. (2016, p. 172) established that the behaviours and motivation of users influenced the use of TNC services. It unearthed that majority of the users are teenagers and the working age, and preferred usage is in rush hours and that a majority of the users live in the urban areas. The ride sourcing application was preferred for its short waiting time, significantly higher convenience when compared to street hauling, and its flexibility in solving problems experienced by the public transport systems. Pillac et al. (2013, p. 6) distinguishes TNC with the taxi the medallion system and reveals that the latter has multifaceted problems encountered by passengers. The study found out that uses had no means of reporting emergencies. The aspect raises safety concerns, an issue that is aggravated by poor approval rating because of the frequent complaints among the passengers on inappropriate behaviour among drivers. The metered taxis in Thailand were also lacking a means of recording journey details, route information, and profile of the drivers. The passengers were not able to check their fares before the ride and were dissatisfied with the fact that the drivers did not have standard meters for determining the charges. This is an exciting study, despite the application not having been introduced until 2012 in Thailand. The problems highlight the necessities to come up with the solutions to solve the issues affecting the passengers.
3. Problems Experienced from Utilizing TNC Taxi Application and Suggestions for Areas of Improvements
While TNCs are associated with disrupting a market that was historically considered conservative, they have also exposed problems that need to be addressed. Rodgers (2016, p. 21) presents a situational analysis of the application-based taxis, where the findings revealed that laws and regulation that were in force were outdated and were not favourable for the TNCs. The infectiveness of the current rules is highlighted by a study by Dobson (2014, p. 733) found that Illinois has not experienced chaos witnessed in South Carolina regions because of adopting rules and regulations for governing fair practices and protecting passengers.
Despite being cheaper and more convenient, TNCs are facing some legal challenges, including not observing the local wage structure. For instance, contracted drivers have higher earnings as compared to metered taxis. However, the systemic conflict is paradoxical, as customers prefer the technology-driven transport system. The cost-benefit issues call for appropriate legislation, including the need for prices restructuring, adopting laws, and formulating regulations for the ride-sharing systems.
Conclusion
Nowadays, there is a higher inclination towards the technological utility in the taxi industry where Uber is considered to be the future of the taxi systems. The ease of installation of the application makes them affordable and popular as they can be quickly downloaded and benefits the consumers through a greater convenient online. However, users can be afraid to share personal information and cautious in providing identifiable details in registration. Another drawback is the high cost of investment into the development and expansion. TNCs also face some legal challenges.
Chapter 3: Analysis
TNC drivers - 10 ‘UBER’ drivers classed into six full time and four part-time drivers ( 9 males and 1 female.)
1. Factor influencing career decisions as “UBER” drivers
Income Factors
Income was the most crucial motivation among the respondents. For full-time drivers, their career decisions were due to unemployment and retirement. Two respondents claimed that they quit their jobs to work as fulltime drivers after realising they were earning more during the 4-6 months part-time trial period.
Among other part-time drivers, they worked during weekends, weekdays after work, and any other breaks from the university.
Cost Factor
Uber drivers underwent an effortlessly easy and quick online registration. Once the documents were checked and approved, individuals immediately rent their cars. The technology matches passenger to nearest drivers, an approach that results in a reduction in fuel costs when compared to the traditional method of searching for street haulers.
Earnings
Seven drivers stated they found the application to have improved their earnings. Full-time drivers work 12-14 hours a day and earn B48000-B80000/ monthly. The part-time drivers earn between B2000-B5000/week, which they reported to be sufficient for their expenditures.
2. UBER (TNC) in solving the inefficiencies and operational issues experienced by metered taxis
Three respondents who previously rented taxis reported medallion companies maximise their capacity by renting out as much of their available cars. However, the company overlooked safety as some driver lacks a valid driving licence or their criminal records are not investigated. The weak scrutiny explains why meter taxis fail to achieve the service standards parameters. The dissatisfaction is evidenced by the refusal of passengers, unsafe and careless driving, impolite manner, and exploited pricing.
On the other hand, TNCs filter drivers during registration. The majority of drivers agreed that the scoring and feedback features introduced by TNCs improve the efficiency of taxi operations. Poorly-rated drivers were suspended and deregistered from the service.
3. Problems drivers experienced from using the application
System errors
Passengers have the option of cash or credit/debit card to settle the cost of their journey. Two drivers dislike the credit system as cash is not instant and payments required weeks to be transferred. Eight drivers supported this given the inconvenience of carrying loose changes when cash payments were made. The driver can similarly track their earnings accumulated in their account. The comparative analysis by Chan et al. (2016, p.217) proved the online payment system to be one of a cause for the revolutionary power of TNC.
The matching system minimises passenger’s waiting time. However, it automatically switches when other drivers are closer. This caused confusions for passengers and drivers as requests can be suddenly cancelled. Drivers are also frustrated by the short period notification (15 seconds).
All drivers reported denied requests. Although the rewarding scheme in TNC demanded that acceptance rate must not be lower than 80% together with cancel rate below 25%, the system’s flaw prevent makes this unachievable. Once the passenger got into the car, some drivers were forced to cancel because some routes may encounter poor traffic conditions or destinations are far out of service range. While Uber introduced a feature that allows the drivers to match with passengers who are heading to similar destinations twice a day (i.e. going to and back from work), six respondents proposed, this improve but do not offset the problem.
Passengers related issue
Once the passengers cancelled, drivers are unable to accept new requests for 10 minutes, which led to the loss of incomes opportunities. However, passengers with frequent cancel requests were reported and could have their account deactivated.
TNC users - 10 Passengers who previously used UBER (7 females and 3 males)
1. Taxi Usages
Frequent users (Two respondents); The respondents use Uber on their daily basis because of car conditions, regular promotions, and the convenience of the online payment system. The superiority is confirmed by Pillac et al. (2013, p. 6), where they note that the medallion taxi system has no means of reporting emergencies. Uber assured the passengers with greater safety through allowing passengers accession to journey details, route information, and driver’s profile.
Occasional users (Five respondents) Occasional usage where the respondents live in an alley or due to poor weather conditions and the inconvenience experienced from other forms of transports, alcoholism, or at times when getting a taxi is demanding.
Cars owner (Three respondents); Passengers only use Uber service where it is inconvenient to use their personal cars car breakdown or when there are lacks of parking availability).
2. Factor influencing their decisions to use Uber
2.1 Factors accounting for the continue usages of meter taxis
Respondents who still use meter taxis explained the drivers show a greater level of expertise and knowledge of the routes. A user reported regular usage of cabs to send her children to school. Contact details of the driver were taken, and frequent usages resulted in the customer’s confidence on their safety.
2.2 Marketing mix factors influencing TNC usages Product
The matching features and ride scheduling led to improved convenience from street hauling. Shorter waiting time and certainty of finding a ride explain passenger’s preferences for TNC over the taxi and other public transports Pillac et al. (2013, p. 6). Passengers can track their lost belongings by contacting the drivers or reporting to the system.
Thee respondents suggested they appointed Uber to pick up relatives and friends. The pickup locations and destination can be set while the real-time location of their families and friends can be tracked. Such features are competitiveness advantages of TNC over meter taxis.
Pricing (Fares)
Uber calculate fares based on the distance and total journey time. Eight users were convinced that the fare differences of B50-100 (£1.14-2.28) higher than meter taxi are acceptable and reasonable because of the quality of service. Two respondents disagreed, noting they experienced a 5.1x times unjustifiable surge.
Place
TNC application is compatible with iOS, android and windows. Services cover a large area and are available 24 hours.
Promotions
Discounts are given to loyal passengers. First-time users receive B300 (£6.5) reduction through “share a ride”, the referrals system via peer’s recommendations. Further, advertisements such as planks where celebrities disguised themselves as Uber drivers also gained much popularity.
People
Drivers are professional, polite, trustworthy, drive safely and comply strictly with traffic rules. The navigation system is accurate.
Physical evidence
Uber’s vehicle’s physical condition; cars are new (under ten years), highly maintained, well ventilated and comfortable.
Process
Uber provides a shorter waiting time compared to the two ways radio dispatch system. Pick-ups are timely on average of 5.30 mins in central Bangkok and 7 minutes for surrounding areas. This is consistent to Rayle et al. (2016, p. 172), the physical functions/ performance provided by Uber can resolve problems commuters experienced from meter taxis.
3. Problems passengers experienced from using the application
3.1 Problem due to the application system
The inaccuracy of the GPS system causes great inconvenience to passengers. They resolve the issue by cancel and re-pinned their location which consequences a waste of time.
Passengers were charged with tolls fees in addition to their fares. This result in dissatisfaction in how the passengers see their fares mismatch that estimated prior the journey.
3.2 Problem due to the Uber driver.
Unlike taxi drivers who were trained to memorise routes, Uber drivers are guided by the GPS navigation system. The poor routes familiarly resulted in the use of metered taxis because they are aware of alternative ways that can minimise time spent on the can during heavy traffic. Other respondents considered the issue as trivial, as they can direct the driver.
Suggestions
1. Government regulations
As Rodgers (2016, p.21) note, laws and regulations in taxi industry are outdated. The Thai frameworks are incapable monitoring the quality of the meter taxi. Any person over 22 years with the minimum of a year driving experience can obtain taxi licenses. The legal framework should be modified so that the quality of drivers is assured. The supposition is evident in the Black Cab in London, where are required to memorised the 230 routes, 25000 streets, short-cuts and range of London attractions. Licensure is also stringent, as the driver must complete a placement that requires approximately 15-30/week of study for 2-4 years (culture-creatures, 2015).
2. Self-regulating
TNCs are facing a number of legal challenges, including lack of covers. Uber collaborated with Metro-mile to introduce a vehicle insurance scheme specially designed to protect TNC passengers and drivers.
3. Legal Framework
TNC is illegal in Thailand as the use of a personal car for service is against the 1979 transport law. Drivers face the risk of legal punishments, including cancellation of licenses. The issue calls for appropriate legislation as suggested by Dobson (2014, p. 702). The government should have distinct permit systems designed for metered and TNC taxis.
4. Taxation
Six full-time drivers agreed they would pay taxes and comply with all the requirements if Uber is legalised. Part-time drivers argue costs of tax acts as disincentives to discontinue the career and seek income elsewhere.
4. Limitations and Conclusion
Limitations of the study
1. This research focused mainly on “Uber”. However, the ride-sharing market consists of TNCs such as Grab Taxi and All Thai taxi and new entrants such as Taxi Beam, Taxi Ok and Taxi VIP. It would be interesting to carry out additional studies to further investigates the direction of the impacts in the future, after a greater level of market saturation
2. While Uber’s operation has expanded into other large cities such as Chiangmai and Phuket, this research focused solely on the operation of Uber within Bangkok.
3. The sample is 15 respondents. A more extensive sample could lead to a significant dimension of responses.
4. More investigations could have been done with a focus on the “Gig Economy” ( flexible labour model, employees are on demand and not being tied up in full-time contracts. Uber is an example of the Gig economy whereby drivers are not contracted employees but are mere freelancers. They can allocate their working time and uses application technology as a mean of providing services.
Conclusion
One irrefutable claim is that Taxis remain the most convenient and flexible means of Transport in Bangkok. Despite their ubiquitous nature in the metropolis, the taxi business has not commanded loyalty because of poor customer relationships as evidenced by careless driving, impoliteness, exploitative prices, and the insufficient supply of drivers. The concerns have made the market susceptible to disruptive forces, an issue that became evident with the entry technology-driven products being pioneered by TNCs. The entrance of Grab Taxi in 2013, Uber in 2014, and All Thai Taxi in 2015 significantly changed behaviours of service users. Since the introduction of TNCs, there have been behavioural and motivational changes, where key triggers remain timeliness, convenience, and flexibility.
Despite being cheaper and more convenient, TNCs are facing many challenges. While drivers are assured better returns, the pricing model overlooks the market concepts of supply and demand equilibrium. There is a need to fix the pricing mechanism to align it with market concepts. Another aspect is welfare concerns of drivers and passengers, as no form of insurance exist to cover the rented cars when they are delivering the service. The loophole remains the primary aspect in illegalization of Uber in some countries, where the operations of the TNC is inconsistent with domestic laws on transport facilities and wage structure. For instance, contracted drivers have higher earnings as compared to metered taxis, a disparity that has culminated into ugly business practices such as burning rivalling cabs.
Despite the operational hiccups, the current systemic conflict is paradoxical, as customers prefer the technology-driven transport system. The cost-benefit issues make TNCs a Faustian bargain with as many benefits as well as opportunities. Policymakers should direct their focus to exploit the advances to resolve the conservative culture in the taxi sector, as technology presents opportunities to both the medallion-taxi system and TNCs. One move would be enacting appropriate legislation and adopting rules and regulations for governing fair practices and protecting the interest of all stakeholders.
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