Two Years in, Taxi Biz Proves Tough Going

More than two years after the first metered taxi company launched in Phnom Penh, another company has joined the market and its customer base is steadily increasing. But the two companies say they are still struggling to turn a profit.

Global Taxi, the first metered taxi service in Phnom Penh, launched its first fleet of a dozen Chinese-made BYD cars in July 2008. When the company first started, Global said it expected to turn a profit within six months to one year.

Two years later, Global Taxi is making “very, very little” profit, according to Lim Sovann, Global’s CEO, who said he did not know the precise annual figures.

“The cost of the taxi meter is not so expensive and gasoline price is very, very high so our profit is very small, very little,” Mr Sovann said.

Global taxis currently charge $1 for the first 1.6 km and $0.10 for each additional 160 meters. Before July, the fixed rate was $1 for the first 2 km and 400 riel for each additional 200 meters, but the price was increased due to rising fuel costs.

Global officials also planned to have 60 taxis by mid-October 2008, but the company currently has just 32 cars operating in the city.

After Global’s launch in 2008, Trans-Choice Cambodia became the second metered taxi company to take to the streets of Phnom Penh in October 2009. Trans-Choice now operates 50 Hyundai-Kia taxis complete with GPS devices and charges $1 for the first 1.5 km and $0.25 for every additional 330 meters.

Mr Sovann said that while Global’s customer base had increased since its launch, it was still not enough to justify a fleet of 60 taxis.

However, Choi Dae-yong, Trans-Choice general director, claimed that his company now served an average of 1,000 customers a day. During the first month of operations, Trans-Choice only received between 50 and 100 customers a day, he said.

Despite the swelling customer base, Trans-Choice is only breaking even, he said.

“Business is still increasing and growing up with better service. Profit now is nearly even point. [It’s] not so much profit, but we hope in near future we get it,” Mr Choi said, adding that Trans-Choice was still paying back bank loans for its investments and that he expected the company to turn a profit in the next six months.

Though metered taxis are struggling to make profit at this stage, Vorn Pao, president of IDEA, Phnom Penh’s tuk-tuk, motorcycle taxi and street vendor association, said that the taxi companies had already eaten into tuk-tuk operators’ revenues.

“Since the metered taxis came to Phnom Penh, profits for the tuk-tuk drivers have decreased because they are losing a lot of passengers,” Mr Pao said, adding that some tuk-tuk drivers only earned 5,000 riel per day, or about $1.25, and some days they earned nothing.

However, some tuk-tuk drivers claim that metered taxis are not as much of a threat because the two vehicles appeal to different types of customers. Heng Sam At, a 27-year-old tuk-tuk driver, said some customers preferred the Cambodian feel of a tuk-tuk, especially foreign customers.

“The foreigners like tuk-tuks because in their country, they have many taxis. They want to try a Cambodian product,” he said.

Moeung Sophan, deputy director of public works and transport in Phnom Penh, said there were currently three licensed taxi companies in Phnom Penh: the two metered-taxi businesses and Association Taxi Phnom Penh International Airport, a non-metered taxi service that takes passengers from the airport.

The municipality does not yet have a policy for providing licenses to new taxi businesses, but the three companies are welcome to increase their fleets if they are successful, he added.

 

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