In an annual general meeting (AGM) that took place Friday (26 April), Singapore taxi company ComfortDelGro (CDG) introduced a profit-sharing scheme with its drivers.
CDG will offer lower taxi rental rates to drivers in exchange for a 15% cut from drivers’ earnings, according to this source.
Drivers have no minimum number of trips to hit under this scheme.
This “voluntary scheme” has been likened to Grab’s model by a Mr Tay, who has driven for 10 years, the source interviewed.
“They (Grab) offer low rentals, but for every trip, they take 20 per cent of the fare.”
Older drivers “who don’t do so many trips per day” would find CDG’s new initiative “most attractive”, Mr Tay added.
Another taxi driver the source interviewed, Mr Pang, said, “Times are bad, so this is a necessary move.”
The scheme has been offered to the first batch of more than 1,000 single hirers of Hyundai i40 cabs that are less than four years old on Friday afternoon.
Hirers who take up the scheme will pay a daily rental of $68 to $78 instead of about $105.
CDG’s CEO, Yang Ban Seng, shared, “If successful, we will look at extending this scheme to other drivers as well.”
Mr Yang also said the taxi firm might also consider offering ride-sharing, an option similar to competitor Grab’s GrabShare option.
According to the source, there are now 20,000 cabs on the road, down from about 28,000 in its heyday.
Taxi rides have also dramatically fell from one million trips a day to 650,000.
Other measures CDG has taken to remain competitive in the industry include right-sizing their fleets and scrapping diesel taxis with high certificate of entitlement (COE) prices.
CDG has has replaced them with new petrol-electric hybrid taxis that are more fuel-efficient and do not get imposed a diesel tax.
The source pointed out that the fleet now has 22% of hybrid taxis when it was once almost exclusively made up of diesel taxis.
According to PayScale, the average salary of a taxi driver in Singapore is about $34,700 a year, which is $2,890 a month.
Under this scheme, say drivers pay $68 per day for rental, drivers would save $1,110 (35%) a month on rental and 15% of commission would equate to $433.50 based on the average salary.
With that said, a taxi driver earning a gross salary of about $7,500 a month will not find this scheme beneficial since 15% of their cut is $1,125 – $15 more than their savings of $1,110.
All in all, the savings would still outweigh the costs and the new scheme seems to benefit the majority of taxi drivers in CDG.
What do you think of CDG’s new scheme? Share with us your thoughts in the comments!
Featured Image Credit: Tam Ging Wien via probutterfly.com
