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May 20, 2014

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Drop in taxi app bookings as incentives cut

CABBIES yesterday reported a decline in bookings through third-party applications after Kuaidi Taxi and Didi Taxi on Saturday removed their incentives for passengers who use the software.

Yesterday was the first working day since the cash rewards, which rose to a peak of 20 yuan (US$3.20) per trip, were rescinded.

A Shanghai Dazhong Taxi driver surnamed Chen said that since the change, the number of fares he booked per day through the apps had halved.

“On workdays, I used to get at least seven or eight orders through the apps between 9-11am, but today I got only three,” he said.

The cellphone taxi booking apps have been around for more than a year, but their popularity rocketed in January, when Kuaidi and Didi began offering subsidies.

The launch of the software meant that people no longer had to stand on the curb trying to hail a cab. But taxi companies were unhappy because the apps supplanted their dispatch systems, which charge passengers 4 yuan per booking.

Cabbies are still paid subsidies by Kuaidi and Didi for each fare they take through the apps, but as of Saturday the rate was cut to 3 yuan — from a high of 15 yuan — with a cap of 10 rides per day.

For Kuaidi and Didi, the subsidies were a promotional tool to get people to sign up for the service. But the cost of the subsidies was high, leading many to speculate they wouldn’t last forever.

Kuaidi, which is backed by Internet giant Alibaba, said it spent 100 million yuan nationwide supporting its app platform since January.

Chen said he isn’t worried. He said some people who got to know him through the app system now call him directly to book a ride.

“Some of my colleagues and I built up a WeChat group and invited regular customers to join,” he said.

“We upgraded our service by opening doors for passengers, providing water and installing Wi-Fi in the vehicles at no extra charge.”

Causing havoc

Shanghai municipal authorities were never particularly happy about the app subsidies, which made a short-distance taxi trip no more costly than a bus or Metro ride. If the rides were short enough, some passengers even profited from taking a cab.

Transport officials said the system was playing havoc with the smooth running of the city’s transportation network.

The Shanghai Transport Commission banned cabbies from taking app bookings during morning and evening rush hours so that people hailing cabs wouldn’t be at a disadvantage. They also told the city’s main four taxi companies to ensure their drivers were paying attention to the road and not to software installed in their vehicles. And they ordered taxis to turn on their “in use” lights from the moment they took a mobile booking.

The taxi companies yesterday said they have seen no discernible change in business from their own booking dispatch centers. However, they did report a drop in passenger complaints related to the app systems, such as drivers failing to show up after a fare was booked.

Kuaidi said it has about 7 million passengers and 80,000 drivers using its app in Shanghai. It began paring subsidies in March to prepare them for the change in policy. At the height of the incentive scheme, the software was being used 400,000 times a day, it claimed.

“Shanghai and Hangzhou were the target cities when we started the app program last year,” said Ye Yun, director of communications at Kuaidi.

“We have already met our targets on user numbers.”

Kuaidi said it has no immediate plans to eliminate subsidies to drivers and will introduce coupons and other non-cash incentives for passengers.

Good sense

According to office worker Wang Suhan, who said he regularly uses the Kuaidi app, the withdrawal of the cash incentives for passengers makes good sense.

“It was the right decision because those people who don’t actually need a taxi will now think twice before calling,” he said.

“The crazy days when a 10-yuan subsidy made a short taxi ride no more expensive than taking a bus are over,” he said.

Meanwhile, Shanghai Jinjiang Taxi Co said yesterday it had never encouraged its drivers to accept bookings through the apps.

It said it told its cabbies that the company would bear no liability for any accidents or incidents that occurred while they were carrying passengers who booked through the apps.


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