Understanding Amman’s Yellow Taxi Dilemma A DIFFERENT TAKE ON THE GOVERNMENT’S ONGOING BATTLE WITH RIDE-HAILING APPS

Contributed By: Hamzah Nassif, cialis iMena Group

Probably the most misunderstood segment of workers in Jordan, order the taxi drivers went on a protest today to voice their objections to the status quo of their sector. Several regulatory bodies that are collectively in charge of “regulating” the transport sector are still scrambling to catch up with the new technology-driven paradigm that has already identified and implemented the solution to the problem in Jordan.

I’m not talking about the smartphone applications you probably have in mind. If you have been following the news this week, then you’ll most likely have read a story or two about the government scrambling to address a problem created by two smartphone applications. That problem is allowing unlicensed cars and drivers to provide public transportation services that compete head to head with the existing yellow taxis. The yellow taxis that everyone loves to hate because, let’s face it, everyone has had a bad experience with a taxi driver before.

However, what you will not read or hear about is, one: that there are simple, known, and easily addressable root causes of the bad experiences we’ve all had with taxi drivers in the past, and two: that these root causes have already been successfully addressed on a very large scale and across a wide segment of the population; both passengers and taxi drivers.

The Success Story No One Is Talking About

Three years ago in 2013, a joint venture between a German tech incubator, a Brazilian company, a Saudi Telco, and iMENA Group (disclaimer: the latter of which I am an investment principal) brought the first taxi hailing application to Jordan. That application is called “Easy”, and since its launch more than 7,000 Jordanian taxi drivers and hundreds of thousands of Jordanian passengers have used the application, altogether hailing more than two million rides electronically using their mobile phones.

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Throughout this period, we learned a lot about both the struggles of being a taxi driver in Jordan, as well as the real reasons for their notorious record and the bad experiences passengers have historically had. We learned that, just like all other working people in Jordan, taxi drivers are looking to generate income to support themselves and their families in an economy that is already tough enough as it is, but add to that: one, constant harassment by traffic police (who, let’s admit it, act more like a collection agency than true law enforcement); and two, being tightly squeezed between an ever-expanding cost of living and operating, and a government imposed tariff pricing level that has not increased significantly since the 90s.

We learned that there are two main problems underlying all symptoms of low quality service in the yellow taxi segment in Jordan:

1- The lack of controls, checks and incentives for quality of service, and…

2- The artificially suppressed taxi fare, which is also structurally skewed and archaic when tested against the realities of today’s heavily congested roads in Amman. (in short: the taxi meter or عدّاد التاكسي).

Every complaint often lodged against taxis in Jordan can be traced to one of the above two problems. Let’s go through the most common complaints one by one:

Complaint #1: Taxi drivers ask where you’re going before picking you up, and either refuse to pick you up or ask you for extra money if they “don’t like where you’re going,” or if they’re “not in the mood”.

It’s easy to attribute a problem we don’t understand to something that we can’t control, like someone else’s mood swings, and this is the psychological trap people often fall into here. Remember, these taxi drivers need to generate income and they are in fact rational people pursuing an economic benefit. So one must really ask themselves why a taxi driver would say ‘no’ to a passenger literally knocking on their car door to give them business.

the driver has to make on average JOD 45 everyday just to break even...

The problem, it turns out, is related to the way the fare meter installed inside the taxis works. See, the meter operates in two modes depending on the state of the vehicle. Mode 1: “waiting”, and Mode 2: “moving”. The “waiting” mode kicks in when the vehicle is traveling at a speed roughly below 20 km/h, while the “moving” mode kicks in when the vehicle is traveling just above that speed. As it stands today, the taxi driver makes just JOD 0.019 for every minute of “waiting”. So if they are stuck in stop-and-go traffic during peak hours for 20 minutes, they will make a grand total of just 38 piasters.

To understand why this is such a big problem for taxi drivers, consider the operating cost of the taxi vehicle per day. The simplest operating model for a taxi in Jordan is when a driver “rents” the taxi from its registered owner in exchange for a daily fee (or “ضمان”), which on average is around JOD 25 per day. On top of that fee, the driver has to pay for gas, which on average is around JOD 20 per day. This means that the driver has to make on average JOD 45 everyday just to break even (i.e. achieving no income). So for the driver to be able to generate a monthly income of, say, JOD 600, and without even taking into account any incidental costs (like traffic tickets), he has to generate around JOD 65 everyday. Using that number and assuming drivers work on average 10 hours per day, that means a driver has to generate, on average, JOD 6.5 an hour. Given that most demand is concentrated during peak hours, in which traffic congestions run havoc across the city and along most trips, it becomes obvious why taking a ride through heavy traffic during peak hours becomes a losing proposition for any taxi driver, thus causing drivers to ask customers where they’re going and trying to negotiate a price in case they anticipate running into traffic on the way.

Complaint #2: Taxi drivers haggle for the price, or ask for an extra charge above the meter, especially at night, or, pick up multiple passengers on the same trip.

This complaint is also driven by the taxi meter. Drivers will often ask passengers for extra money before taking the trip in order to avoid losing income due to heavy traffic and the taxi meter. They will also often ask for extra money at night, because that is often when the realization sinks in that they will not make their target daily income, and asking for extra becomes the only way to bridge the day’s deficit.

Drivers also pick up additional passengers for the same reason. This is particularly true of trips made during peak hours and heavy traffic congestions.

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Complaint #3: Taxi drivers behave badly, smoke in the car, accept phone calls while driving, harass, or are simply rude to passengers.

The problem of bad behavior has been there because until the arrival of smartphone applications like “Easy”, a taxi ride was a one-time transaction with no feedback loop that ties quality of service to repeat business. Most people do not have a “go to” taxi driver that they call in advance, and rely on hailing the closest available taxi from the street. Since you have no choice over the taxi driver, and you are unlikely to run into that driver on the street again, let alone remember them anyway, there has been absolutely no incentive for taxi drivers to be courteous towards their customers. And I may be harsh in saying this, but this is a problem that’s not limited to only taxi drivers in our society, as our population in general lacks such courtesy towards others in the absence of monitoring or any social or legal enforcement mechanism (e.g. smoking in clearly marked non-smoking areas, littering in public, skipping queues, bad driving, etc.).

SOLUTIONS. TRIED AND TESTED.

The solutions to the two problems underlying the symptoms of all the complaints mentioned above are simple, widely known, and already proven worldwide by different players in different markets. They have been successfully implemented by “Easy” in Jordan (and other countries) and have resulted in a marked improvement in the level of service over the past two years.

First, in order to address the problem of bad behavior, a rating system is used. The performance of drivers (and passengers) is tracked by the app, and the ratings are used to provide drivers with rewards for good service, and sanctions for bad.

Second, to fix the problem with the taxi meter, an in-app taxi meter is now used that provides a pricing structure that is fairer and more aligned with the realities of today’s traffic in the heavily congested streets of Amman during peak hours. This has resulted in higher average income per trip for drivers, while at the same time not rendering taxi rides unaffordable to passengers (which is an indication of just how low the existing taxi tariffs are).

The net result of the above is that we have today a working solution to the most common problems often cited with respect to yellow taxis in Jordan, and it is a solution that has been adopted by hundreds of thousands of users and thousands of taxi drivers. It’s a solution that has been working for more than two and a half years now; a solution that has worked within the confines of the existing laws and regulations, with all stakeholders (taxis, passengers, and regulators), and did not seek to destroy or otherwise undermine the existing segment of operators in the sector, but instead actually worked with them on solving their core problems.

It’s a success story that has gone greatly unnoticed in the press, but otherwise demonstrably recognized on the streets and amongst both drivers and passengers, especially the majority not living inside the bubble of West Amman.

It’s a success story no one is talking about.

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