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End of the road for apps’ unlicensed taxis?
2015-03-20
By Tan Weiyun

CHARLES Chen is a studious-looking university teacher by day, but by night he becomes a taxi driver, driving his Audi A4L to pick up passengers who book him through the Kuaidi app.

“On a good month I could earn more than 20,000 yuan (US$3,210),” says the 33-year-old, looking back on recent times in his sideline job.

In his car are bottles of water, packs of tissues and newspapers for passengers — part of the high-end “tailor-made” service he offers.

Chen became a part-time driver last November to offer zhuanche — literally “special car” — services through third-party apps. Normally, he works three hours after work, earning about 500 yuan each night.

High-end special car services offer the likes of BMW, Audi and Mercedes vehicles with drinks, towels and mobile phone charging facilities, plus liveried drivers to open and close the doors for customers.

But while the work can be lucrative, it brings legal issues too.

Generally, a regular zhuanche car and driver for hire are required to have a business vehicle operation license.

Chen doesn’t have it, but his car is registered in a local car rental company which acts as a go-between for Chen and the taxi-booking app company.

He estimates that most drivers involved don’t have the business license. Paperwork and costs have been cited as reasons for not getting a license.

“As far as I know, 90 percent of such ‘taxis’ are private cars without operation licenses and they’re running part-time drivers just like me,” says Chen.

In January, China’s Ministry of Transport banned private cars from taking passengers for profit. Cars require a business license and app companies have been told to use car and driver rental companies “out of safety concerns.”

So while Chen and many other drivers get work through car and driver leasing company, they don’t have the required business license.

Didi and Kuaidi — which merged last month while retaining their own platforms — and US-headquartered international rival Uber are the three biggest players in China offering app-based taxi services. They claim to be tackling this issue.

Didi and Uber both say on their official websites that they accept individual drivers with their own cars. While Uber requires the car should have a business license, Didi doesn’t make it clear.

Kuaidi says it does not take individual drivers at all, instead working through car and driver hire companies and taxi firms.

“I found a car hire company and registered my car there. It was easy to become a taxi driver,” Chen says.

The Kuaidi app and the hire company take 10 percent of his total earnings each month, he adds.

The newly merged Didi and Kuaidi issued self-imposed standards on Monday to regulate services.

These include drivers being screened for criminal and traffic convictions, undergoing training, vehicles being monitored through GPS and the Internet and a compensation scheme for passengers in the event of an accident.

Legal issues aside, the taxi app business model — including “special car” services — has proved popular.

Kuaidi’s luxury-type car has a flagdown rate of 29 yuan and then a charge of 4.9 yuan per kilometer, together with 0.99 yuan every minute.

This compares with an economy-type car which starts at 14 yuan, charges 2.9 yuan each kilometer, plus 0.5 yuan every minute.

Though much more expensive than a regular taxi, many passengers have given the high-end cars the thumbs-up.

“I think it’s a good supplement to the taxi industry,” says He Lingzhi, 30, who works for an international automobile company in the Pudong New Area.

The office worker says it was previously a big headache finding a taxi late at night when she’d been working overtime.

“But with this service, I can easily find a luxury taxi within 10 minutes,” He says. “Higher prices sometimes mean fewer customers and better service.”

She once booked a BMW taxi on Uber after working overtime. The 20-minute, 11-kilometer drive cost over 80 yuan. “Of course, this is more expensive than a regular taxi, but the quality it offered was worth the price,” she says.

Tang Wenjia, who works for a publishing house, is also a fan of app-based taxi services — and a touch of luxury.

The 31-year-old once hailed an Audi A6 from the Dapuqiao area in Huangpu District to Xujiahui in Xuhui District. “The driver picked me up quickly. Everything in the car was of high quality — from the cushions to the tissues,” she says. “And I used coupons from the app company, which saved me 18 yuan. I love limousines!”

While customers with traditional taxis can pay cash, passengers who book through apps can only pay by credit card or a third-party payment platform such as Alipay.

The credit card is linked to the taxi-calling apps, which can bring scope for payment glitches.

“I was charged twice for one taxi ride by credit card,” passenger Erika Fang, 36, says.

Meanwhile, Shanghai police are increasingly cracking down on unlicensed cars offering taxi services through apps. Officers disguise as regular passengers to make bookings and then check the driver’s credentials.

Their job was made easier by one foreign driver on Uber who had no business license but had painted a large Uber logo on his car.

“It was a sad story, but it was also amusing,” Chen says. “Apparently he knew nothing about China.”

Last December, 12 unlicensed cab drivers had their vehicles confiscated for offering illegal taxi services and five people were each fined 10,000 yuan.

The Shanghai Traffic Commission said the drivers weren’t licensed for business. It has also warned Didi that it could be fined up to 100,000 yuan if it continues to use unlicensed cabs and drivers.

Increased pressure has seen drivers like Chen cut back on their second job.

“These days, I’ve reduced my part-time driving because the traffic police are cracking down on private cars taking passengers for profit,” admits Chen.

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