International Business & Economy Will ComfortDelGro cut cab rental rates to encourage cabbies to stay with...

Will ComfortDelGro cut cab rental rates to encourage cabbies to stay with taxi company?

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A Comfort DelGro (CDG) cabbie speaking to us on conditions of anonymity said that the taxi company is all set to announce taxi rental cuts for one-man operation (OMO) taxi-hirers.

Brokerage firm OCBC Investment Research said yesterday (12 Jan) that it was unlikely that CDG will announce any rental cuts because its taxi fleet idle rate is still close to 0%.

The CDG taxi driver who spoke to us said that this was because cabbies from the taxi company are waiting for 18 January when the quarterly incentives will be paid out to the drivers.

“Taxi drivers will get more than $300,” said the cabbie of the quarterly incentives payments. Adding: “I know of taxi drivers who are ready to return their cabs on 19 January”.

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The taxi driver said that CDG will offer 3-year-old Sonata taxis at $59 (plus GST) from February onwards for OMO hirers.

Mr William Lim Lian Chin, who is the founding president of the Singapore Cabbies Association (SCA), writing in his Facebook said that the brokerage firm’s analysis that CDG has close to 0% taxi fleet idle rate is “misinformation”. He said that there are “more than 2000 taxi in the garage.”

OCBC Investment Research further said: “CDG is…not sitting still as it is gradually shifting taxi operations from fixed rental rate to revenue risk sharing model. In short, taxi hirers pay up to 50% lesser in rental rates but CDG takes a cut in their fare revenues. We believe this will help ease the hirers’ cost burden, which greatly reduces risk of hirers switching out, and with CDG still (partially or fully) compensated through the revenue sharing mechanism, we believe the impact of revenue decline will at least be partially mitigated.”

A smaller taxi operator, Trans-cab, recently announced taxi rental cuts for one-man operation taxi-hirers to curb lower fleet idle rate in the shortest time possible.

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