Is Uber necessary?

By Yang Dong-hee

Riding taxi in Korea is often associated with an unpleasant experience of speeding, “rider hunting” by taxi drivers and sometimes cheating on fares.

On any given late night in downtown streets, especially in the Gangnam Subway Station and Hongik University areas, you have to be ready to stand on the streets for at least over 30 minutes, waving your hand and telling, or begging taxi drivers to take you to your destinations.

If you are “hunted” by the taxi driver in a comparably short time, that's your lucky day. However, even on your lucky day, you have no way to foresee the driver's service quality like politeness and safe driving. In many cases, you have to just experience a rough ride home, taking your chances on a traffic accident.

Then there suddenly comes a typhoon of innovation to the rough taxi industry in Seoul, which was ignited by Uber, the smartphone application service started in San Francisco five years ago.

"A smartphone application connecting a neighbor who needs a ride with one who can give a ride" ­ “That's cool” was the initial response of many people who read the on-line catchphrase for the controversial ride-sharing system.

It reminded me of “gypsy cabs,” the unlicensed taxi cab operation with private cars, which once caused social problems in Korea. The only notable difference is the role of smartphone applications in linking customers and drivers.

The Passenger Transportation Service Act defines strict conditions for taxi operation. Taxi drivers have to meet various requirements to obtain a taxi cab license. Criminal records are strictly reviewed and they should receive regular municipal training.

Uber Korea, however, did not comply with these rules, which required drivers to be registered as a taxi cab operator, and the Ministry of Land, Infrastructure & Transport (MLIT) and the City of Seoul declared Uber illegal.

Uber, however, brought a change of wind to Korea's taxi cab industry. A total of 40,000 taxi cab drivers joined Kakao Taxi service in just two weeks after they started services nationwide on March 31, and the number jumped to 70,000 in another couple of weeks.

"Nine or eight out of 10 taxi drivers are looking at their Kakao smartphone (applications) to receive calls from clients." said a 65-year old taxi driver in Seoul.

To be more precise, out of the nation's 280,000 taxi drivers, 130,000 people joined Kakao Taxi service as of the end of last month. Kakao Taxi said a total of 10 million clients used their service since they launched the new system. Similar services like “T-map” (SK Planet), EZ Taxi and Limo Taxi began to follow.

Amid this change of service in the nation's taxi cab industry, “COOP Taxi” is leading the innovation. Park Kye-dong, a former member of parliament and a former taxi driver himself, started the all new co-op style company.

In his company, taxi drivers are not just employees who have to pay the set amount of money to the company every day. After they pay this daily obligation of 110,000~120,000 won, they get only 1.2 or 1.3 million won a month. In the co-op, however, every driver is a shareholder. Under the new system, they can take home 600,000~700,000 won more than their monthly average.

"Taxi drivers are working under a minimum wage, which is 5,580 won per hour, but here we are rapidly changing this for the better," said Park. Co-op Taxi, now available in Seoul only, plans to extend its service to Busan next month, followed by Daegu and Gwangju by the end of the year. Park's goal for next year is 1,000 co-op taxis.

Despite this movement in private companies, the government says the taxi industry should be "re-adjusted" to survive the current recession.

According to a survey by the City of Seoul, conducted in July 2013, the number of registered taxi cabs in Seoul was 6.77 per 1,000 people, which is ahead of Tokyo (6.37), London (3.31), New York (1.58) and Paris (1.26).

On the contrary, the taxi fare for every 10 kilometers was 7,955 won in Seoul, 13,271 won in Paris, 21,600 won in New York, 31,162 won in London and 36,979 won in Tokyo. In short, Korea supplies the most taxis at the lowest rate among OECD countries.

The MLIT recently announced that it will reduce the number of the nation's registered taxi cabs by 50,000 on a gradual basis over the next 10 to 20 years, which is about 20 percent of the total (250,000).

The adequate number of taxi cabs in Seoul, according to the city's analysis, proved to be 63,340. To meet this number, Seoul city will have to reduce the current number by 16.4 percent.

Under these circumstances, the Seoul city government announced that it will start a high-end taxi service from this coming October through a subsidiary company High End, which was set up last April.

The city disclosed recently that a total of 50 BMW 530d X-Drive and 50 Mercedez Benz E350 will be used for the reservation only service. The luxury city taxis will not carry the taxi lights on top, but only have yellow number plates.

These cars are not the top-of-the line luxury vehicles anyway. For less than half of the budget, Seoul citizens can ride, say, a Chairman, which is one of the top of the line home made cars.

As a former reporter who covered city hall, may I ask Mayor Park Won-sun: "Are domestic luxury cars not really enough for your ego for Seoul streets? Do you think s it okay that our citizens' hard earned tax money is used in such a reckless way?

I hope he will soon learn from the case of recent Mercedez Benz ambulances, which were purchased for over four times more than local ones and are soon to be discarded, due to a lack of practicality in driving through Seoul local streets.

The writer, a former reporter with the Korea Times, worked 10 years at the Hankook Ilbo New York and returned home to be in sports marketing and show business. He was the first managing director of the Korea branch of the U.S.-based International Management Group. He can be reached at dhyang28@gmail.com.