Cebu’s resurgent taxi industry

When the global ride-hailing services entered the Philippines over the last few years, they were hailed as the future. Filipinos embraced them and argued that they were a solution to a myriad of problems, from traffic, car crashes caused by drunk driving, and even the financial burden of car ownership.

In the same vein, people seemed to write off the taxi industry, just as they did in other parts of the world. They argued that the taxi industry would die off because it has not been changing with the times. Such prediction is more of a possibility than a foregone conclusion: We can still uplift the taxi industry - through technology and customer service, just like the other ride-hailing companies - and what’s more, we ought to out of our love for country.

As much as people like to speak of a monolithic “taxi industry,” it is composed of hundreds of operators and tens of thousands of cab drivers. You may not know the taxi driver who picks you up from the street directly, but he is someone’s friend, batchmate, brother, son, and father. The average Filipino taxi driver deserves a chance to succeed in the new digital economy. I think this premise is one that everyone will support, even the erstwhile competitors of taxis, the ride-hailing companies.

The question then becomes: How? How can the taxi industry not only survive, but thrive in this new on-demand, hyper connected world? There is no easy answer, and the solution will likely require operators and cab drivers to make choices they may be unaccustomed and even uncomfortable making. But this discomfort is part of the innovation process: It gives us an opportunity to be brave.

Case in point: In a special report recently published in The Freeman, one Cebuano taxi operator rued the fact that he would have to pay an outstanding bill to Micab in order to continue using our app. The implication here is that investment in new taxi-hailing technology like Micab is unsustainable at best and cost-prohibitive at worst. The taxi industry, in short, cannot afford to compete.

This idea is one that I vehemently disagree with, not only because it is a foundation of my business, but because innovation is inherently a multiplier. Look at any business software as an example, say an accounting SaaS. Companies are able to pay for the cost of its monthly subscription - and in fact, not even think twice about doing so - because the software more than pays for itself. It is a multiplier. What they pay as a subscription pales in comparison to the additional man-hours and productivity they will gain from its use.

The same principle applies to taxi-hailing platforms across the world, no matter their business model. Taxi operators can afford to pay for the fees of taxi-hailing platforms - whether it’s a per booking revenue share, a flat monthly rate, or even a tiered service charge - because their solutions are a multiplier. By more efficiently connecting cabs with passengers, they can drive more passengers, complete more trips, and ultimately, earn more revenue. In other words, new technology is an investment, one that includes both capital and commitment.

It’s not enough for traditional cab operators to procure new technology, pat themselves on the back, and then call it a day. They must invest the time, energy, and effort into mastering the technology so they can get the most out of it. Such education can be broad, such as basic digital literacy on how to use a phone, and can go to the more granular, such as how to navigate the particular user interface of app (i.e. how to accept a booking for instance). Without this kind of commitment, even the most sophisticated technology is useless.

Eddie Ybanez, miCab founder and CEO