Launching 50 radio taxis on April 1, the city’s new on-call taxi operator Radio Taxi Macau Taxi Service Ltd. nearly has everything ready, and expects a free-of-charge trial run can begin later this month, according to the group’s chairman Cheong Chi Man. In an interview with Business Daily, the company boss states his belief that the new business will win local customers from “black taxis” and Uber. Expecting a “huge amount” of losses for the first year, Mr. Cheong says that to make a profit, more taxis, more passengers and more support from the government are all required.
How are the company’s preparations for the April 1 launch going?
Currently, we have 50 taxis ready. I expect that some 60 taxis will be ready for operations [by February-end]. However, we will only launch 50 taxis for the moment and the remaining will be used as back-up vehicles. We are also preparing both online and offline booking systems as well as other hardware. For example, in current taxis the taxi fares start when the flag drops. But we’re preparing a more advanced payment system that allows contactless payment, which requires an online rate metre. We’re thus developing our own rate-metre system and those for online bookings. I believe our hardware will only be ready around March 20. We will strive to make the hardware installation inside all taxis by March 25. Our office is ready too.
You are also launching a mobile app for taxi hailing. Is that ready?
It’s basically done, but we still need to test the system before we can officially say it is OK to go. In fact, we have signed [co-operation] agreements with Macau Pass and some banks for contactless payment in our taxis already. So basically, there are no other big problems for the launch, but we can’t yet tell you that everything is ready. We had expected everything would be ready around [February] 28. But now we hope by March 10, or during the middle of the month, we can be ready for a trial run and allow passengers to try our service for free. Since we’re not charging any money during the trial run, we may invite some associations or different social groups to try our services via mobile apps or phone calls, so we can improve and adjust services based on their opinions. And April 1 is our official launch.
Will the app allow online payment like Uber?
Fares will not be completely correct if we charge only in consideration of the route taken for a trip. Besides, this is not allowed under Macau law as the government is worried that it cannot supervise the operations. We are supervised by the government, hence, our app will only allow passengers to order a taxi online, while the other side will be the same as ordinary taxis – so we don’t allow online payments. We only accept contactless payment such as Macau Pass, or cash, and we actually prefer the first payment method as it enhances work efficiency. The government also mandates that we are not allowed to obtain bank-card information of passengers, thus we need to develop our own meters. Our meter is precise and will not change the rate of fares. Uber can adjust their prices whenever they want. But we cannot. We charge the same as all taxis out there in Macau. And we only charge an additional MOP5 for the calling service.
How is the recruitment of drivers going so far?
Frankly speaking, it’s a bit difficult to hire drivers. We intended to attract a group of young drivers to join us since, after all, we use good cars. However, based on our current situation, those coming to us are primarily current taxi drivers. Those without taxi experience, meanwhile, account for some one-fourth of the total. Our cars are a comfortable model. We’re using [sport utility vehicles], all automatic transmission and hybrid.
How many drivers has the company recruited so far?
We have hired around 60 to 70. We’re providing them training at the moment. However, for 50 taxis, we need at least 120 drivers. Or, we will not be able to arrange three work shifts a day. The number we have can only support two work shifts and we’ll need to request drivers to work extra hours. We’re strengthening our promotional campaign for the recruitment and we hope the public can support this new industry. We’re offering at least MOP15,000 [per month] for drivers. I consider [the situation] might be due to our current promotions not being comprehensive enough. After all, we are a new company and we are not really that famous. But we’ve started posting advertisements in newspapers these days. We’re also co-operating with the Macao Federation of Trade Unions to jointly hold a recruitment session. We’re striving to meet residents’ demands with the first batch of 50 taxis. But for the remaining ones, we’ll see how the first 50 do.
We’ve bought all 100 taxis and by May they’ll have all arrived. We will gradually increase the number of taxis in operation since we want to provide better service for residents in order to build a positive image for the whole taxi industry.
How does the company aim to improve the local taxi service?
We will set up a bonus scheme for drivers. We will offer a grading system for passengers to rank the service provided by our taxi drivers. We will have financial rewards for drivers who get high grades. Meanwhile, we don’t allow drivers to select their own orders.
Are you confident that the remaining taxis can be operational within one year, as the contract requires?
If everything goes smoothly, it’s possible that we can make all taxis operational in two or three months. I cannot tell you when they can be all operational exactly. After all, we are a new company and a new operation. Of course we hope to launch all the taxis as early as possible since we have bought all the cars.
Given “black taxis” also have their own hailing applications, and Uber is also operating in Macau, how do you see the competition in the industry?
Improvements are only made when there are competitors. But we should note that Uber’s operations are illegal in Macau. Residents need to be concerned about the risks of using Uber. I believe, following the launch of our service, Uber will not exist anymore. If our work goes smoothly and there are not too many complaints from residents, we’ll make [all 100 taxis] operational step by step.
When the company won the bid, you hoped the MSAR government could grant you some 40 to 50 parking spaces downtown. What is happening with this at the moment?
This is really a problem that we are facing right now. For the bus industry, the government has granted a huge plot for it to park buses. The government is requiring us to pick up our passengers within five minutes after receiving the order. But if all my taxis are parked in NAPE, it won’t be possible for us to pick up passengers in Areia Preta even in 30 minutes. How can we meet that requirement? We have suggested the government should reserve three to five parking spaces for us at all public car parks so that our taxis can be spread all over Macau. We thought the government would support us. The government has asked us to guarantee our service and our company is willing to accept this responsibility. But the government should co-ordinate with us, or how can I fulfil my service promise to pick up passengers within five minutes? This is impossible. Say, from Areia Preta to Fai Chi Kei, it would take at least a few minutes. How about if we need to go to Barra?
The government has car parks in different districts of Macau. And I believe residents would not complain about that. We’re here to serve residents. We are different from “black taxis”. We hope the government can listen to social opinions.
They have already rejected our request for the reservation of public parking spaces, offering us 14 mobile parking spaces on roads, which is not sufficient at all. In fact, in order to serve the whole of Macau, we need to be spread over all different districts. If we can park in public car parks, it will make the service more convenient as we can tell residents: if you need a taxi, just go to the public car park nearby you.
Where are these 14 mobile parking spaces?
They’re spread over Macau, on the Peninsula, and in Taipa and Coloane. But we hope the government will grant us more parking spaces. The most ideal would be inside public car parks. In that case, we will not occupy any public space on the road.
Currently, how long do you expect it will take on average to pick up a passenger?
Well, we hope to reach the five-minute requirement of course. If there’s no traffic jams, I believe we can meet this target. But if there are, it’s hard to say, especially for peak hours. But our long-term target is to increase the total number of our taxis in operation to some 300 in two years, which will fully meet the demands of local residents, based on our internal analysis.
But your license only allows for 100 taxis…
Yes, but the government will review our operations after one year. And we do need more taxis. I can tell you that for sure we will lose money if we’re only running 100 taxis. And this loss could be huge. We cannot pick up any random passengers on the street but only by order; there are always traffic jams downtown during peak hours; “black taxis” can choose whether to go to a district or not, but we will go to all. We won’t have any business if there are always traffic jams. In addition, we have five barrier-free taxis, which will probably contribute some MOP100,000 to our losses every month, since the time taken to service disabled passengers will be longer, so we may only handle two orders per hour, but the cost for the drivers is still there.
What’s your target for the number of orders per day or month?
This will depend on the support of local residents, and our promotions. For the moment, the most important issue for us is to get good feedback from passengers. At the current state, we expect to receive two to three orders per hour, which is around some MOP70 and MOP80. That’s why I’m estimating a loss of between MOP3 million and MOP5 million for the first year of business. But we hope the performance can improve in the following years, and that the government will release more resources to reduce our costs.
Given the estimated loss, will you consider increasing your fares after the first year of business?
The reason I didn’t set my fares too high is I considered that people would not prefer my services if they could take a taxi with cheaper prices. Besides, I still need to pay my drivers’ salaries even when we don’t have any business – and that will cause an even bigger loss to me… Now I’m using a very good model of vehicles that can carry six passengers. Providing a comfortable environment, I believe passengers will prefer my cars rather than “black taxis”. My aim is to get more people trying my services. I hope residents can accept and support us. Once they do, we can survive.
Your license carries a term of eight years. Are you confident that you can break even within that period?
I would be lying if I said we don’t care about making money. But my current focus is on how to run this business. We cannot only care about profits at the beginning stage of a business, but rather in gaining residents’ recognition. Once residents accept us and use our service, we’ll make a profit. If we maintain the level that earns only some MOP70 per hour [per taxi], there’s no way we can make a profit. To be profitable, our business needs to generate at least MOP100 per hour [per taxi].
The new “on-call” taxi operator
In September 2016, Radio Taxi Macau Taxi Service Ltd. was awarded a ‘special taxi licence’, which is valid for eight years and allows the company to run 100 special taxis in the city.
The first batch of 50 special taxis is required to be operational on April 1, while the remaining half will be available within the following year.
Radio Taxi will charge MOP5 to order a ride, and there will be no no-show fees.
The special taxis can only be hailed by telephone, by online order or a mobile phone application.
The company can propose a fare adjustment two years after commencing operations.
In addition, the company must provide at least five barrier-free taxis and ten large-scale taxis, although the purchase expenses for the first ten barrier-free taxis will be covered by the government.
According to the Transport Bureau, the operator proposed in its bid to provide free Internet service, the installation of onboard diagnostics and the establishment of a back-up database for urgent situations.
The city’s previous radio taxi service ceased operations in November 2014. Despite operating the service for over 20 years, the single radio taxi service provider at the time, Vang Iek Radio-taxi Co. Ltd., quit when it failed to reach a new agreement with the government. Vang Iek ran 100 yellow-colour cabs in the city, which came to be known as the “yellow taxis”.
Following the company’s exit, at the beginning of last year, the government re-opened a bid for the ‘special taxi licence’, receiving three bids.
In addition to Radio Taxi, the two other bidders were Lai Ou Taxi Service Company Ltd., controlled by local businessman David Chow Kam Fai, and Taxigo Company Ltd., which is the operator of the “black taxi” hailing application TaxiGo.
The Taxigo bid was rejected by authorities at the beginning stage of the tender as it failed to comply with the bidding rules, while bidder Lai Ou had proposed in its bid a MOP15 charge for ordering a ride, in addition to a no-show charge of MOP5.