ComfortDelGro, Singapore’s largest taxi operator, is in talks with ride-hailing giant Uber for a potential strategic alliance that could include teaming up on fleet management and booking software solutions.

In an announcement posted on the Singapore Exchange on Tuesday (Aug 22), ComfortDelGro, which has nearly 16,000 taxis under its Comfort and CityCab brands, said the discussions include making its fleet available on the Uber application.

It added that “there is no certainty or assurance” that the discussions with Uber would result in an agreement or an alliance materialising.

When contacted by TODAY, both companies declined to comment further. ComfortDelGro spokesperson Tammy Tan said: “If and when a decision is taken, an announcement will be made.”

Analysts called the move “strategic” — given Uber’s need to ramp up its vehicle pool and ComfortDelGro being “unaffiliated” to Uber’s main rival Grab — but felt both companies made strange bedfellows in some respects.

With Grab’s tie-up with the five operators appearing to give it a lead in the market, Uber is “just going to have (its) position eroded even further” without an alliance with ComfortDelGro, said Singapore University of Social Sciences (SUSS) transport economist Walter Theseira.

Scale is “everything” in the industry, with riders gravitating to platforms with more vehicles, he added.

Joining hands with the taxi operator would give Uber a sizeable amount of market, but Dr Theseira said it would be a “value-losing proposition” for ComfortDelGro if it is simply an avenue to rent out its vehicles.

Rather, through the alliance, ComfortDelGro needs to build expertise for its own app, and be able to deploy vehicles and match demand and supply.

The incentives on both sides were “clearly not aligned”, since private-hire firms such as Uber were “not interested in technology transfer”, he said.

SUSS urban transport expert Park Byung Joon said it remains to be seen if Uber will come up with a new platform under the possible alliance, just as Grab did with JustGrab.

Uber and ComfortDelGro could also combine both their apps, but this hinges on the agreement between the firms, he added.

Dr Park said Uber is replicating the strategy that Didi Chuxing — China’s top ride-hailing provider — adopted in emerging tops in the Chinese market.

Last year, Didi Chuxing acquired Uber’s China business after a bruising battle for riders where Uber reportedly bled US$2 billion (S$2.7 billion) over two years there.

Dr Park said Didi Chuxing had not only built a local driver network, but also teamed up with local taxi companies, allowing it to grow its pool much quicker and with significantly lower capital. ComfortDelGro has so far chosen a different path from five smaller taxi operators here.

Earlier this year, when the others sought approval from the authorities to put in place dynamic pricing, ComfortDelGro — which commands about 60 per cent of the country’s taxi fleet — opted to go it alone with a flat-fare option, which takes into account the distance to be travelled, and computes a fare based on existing surcharges.

In contrast, five taxi operators — SMRT Taxis, Prime Taxi, Premier Taxis, Trans-Cab and HDT Singapore Taxi — teamed up with Grab to roll out JustGrab, a fixed-fare service subject to dynamic pricing.

In May, ComfortDelGro announced it was partnering third-party booking app Ryde to allow commuters to book a Comfort or CityCab ride through the app.

In its Singapore Exchange announcement, ComfortDelGro advised shareholders to exercise caution when dealing in the company’s shares and securities as there is no assurance of any definitive agreement with Uber.

Its shares closed at S$2.17 on Tuesday, marginally lower than the S$2.19 on Monday.

Source:
courtesy of TODAY

by KENNETH CHENG

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