KL cabbies are ruining their own rice bowl

I am writing this post from the consumer point of view.Several years back my job got me posted to Penang. Having fresh transferred from East Malaysia to Penang, I did not own any motor vehicle as I had sold off my car earlier. Having a car is a drag especially when you get posted to multiple locations every one or two years. Morever Penang is a city and life could not be too bad without a car. I could fly home or take the bus to KL on my off days, cool. Spending about 2 years in Penang gave me a chance to observe the cab service- I was very wrong when I thought I could survive in Penang without a car.

The Penang situation.

Upon arrival to the Sg Nibong Penang bus station from KL- one can observe that most bus passengers have their own transport awaiting. One rarely takes a cab. The cab drivers have their own station, and will be pretty engrossed in their carom/ checkers game. Few will be reading the papers. Business is bad- most passengers don't take the cab.The general observation is as follows:
* All Penang cabbies do not use meters. If you happen to strike a conversation with them about cab meters, they proudly proclaim what they are doing is right.
* Most Penang folk have given up taking busses or cabs. Buses never arrive on time and cabs are too expensive. Almost everyone owns a car or a bike.
* Penang cab charges are expensive for the distance travelled. Charges are also subjective, depending from cab to cab and on peak periods or not.
* If you are going out of town, the bus station is 20 km away from town. The cab fare from Georgetown to the Sg Nibong bus station was half the bus fare (RM10) to KL, and after midnight it's almost equvalent to the bus fare to KL (RM20 to RM30). If not for those damn Air Asia flights which is always late at least 2 hours, I would have flew most of the time.
* Reason given by cabbies for not using meters- Penang is a small place, distance travelled is limited- meter charge corresponds with distance, hence revenue is limited. To get more income, cabbies can't use the meter, else their families would starve.
* Tourists know it's better to rent a car than to take a taxi.
* On most days, supply exceeds demand and most cab drivers end up playing either carom or checkers in taxi stands.
* Most cabbies have a fixed daily hire purchase or lease rental that's a fixed cost they must cover. Most cabbies say they've got mouths to feed. But if they are playing checkers or carom all day long, who's bringing in the money?

The KL situation.

The taxi situation in KL is fast becoming what's in Penang. Taxi drivers should not stop using meters or else the situation may be far worse than in Penang eventually. From the theory of economics, taxi is a fairly elastic 1 service in Kuala Lumpur because of subsitutes 2- the LRT, Monorail, RapidKL, kereta sapu and so on. This elasticity is confined to the operating hours of LRT, Monorail, RapidKL, meaning to say if there is an unusual hike in taxi fees within that transport substitute's operating hours, consumers may switch to an alternative mode of transport where service is available. For example, the Monorail is considered a substitute mode of transport if it runs to your destination. Another taxi substitute is getting your own car or bike, which was what I did in Penang; or walk.

Before getting my car, I actually walked wherever I went in Penang- never agreeing to the un-metered taxi system. I could not manage to walk the long distance between the Sg Nibong bus station and Georgetown though. I was so pissed-off with taxis that year that I bought myself a car, and paid the downpayment for my better half's MPV as well. So we got two nice cars that year.

A word of advice to KL cabbies- don't push it. Taxi is a volume business and it doesn't pay to chase your customers away by simply charging without rules. When customers switch, you'll be in bigger trouble.

Update: Checkout these terrible testimonials from the Expat magazine.
1 Elasticity
In economics theory- elasticity means the degree which demand for a particular product/ service is influenced by its price. There are 2 types of elasticity- price elasticity and demand elasticity. A product/ service is price elastic if demand for the product/ service falls when prices increase. People switch to substitutes of the product or stop using it altogether. A product/ service is known to be supply elastic if producers of the product/ service can increase supply as demand increases.

2 Substitute
The next best alternative to the current product/ service whereby it can be used in the place of another. A substitute, depending on its degree of substitutability plays an important part in determining prices.

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