Radio cabs ready to vroom on city lanes
November 12, 2008 11:05 AM
Expanding suburbs and changing urban infrastructure lead to increased demand
You dial a call centre and book a cab two days in advance. It arrives on time, the car is new and the air-conditioner works quite well. The interiors are sleek and the chauffeur well-mannered. Of course, you pay a premium of 50 per cent over an ordinary taxi for the experience.
In the last few months, several radio cab bands -- Meru, Megacabs, Easycabs and Metro Cabs, to name a few -- have arrived on the roads of cities like New Delhi, Mumbai, Hyderabad, Bangalore and Chandigarh. Like several other sectors, it appears that large organised players are all ready to take away a large business from small players.
The difference between a radio cab and an ordinary cab is the service -- it is cleaner, safer and more pleasant. Most black and yellow Mumbai cabs, for instance, are over 25 years old. And experience has shown that well heeled Indians are more than willing to pay a premium for better services. "Even housewives after a heavy day of shopping prefer to take our cabs," says Meru Cabs CEO Mark Pereira.
The way urban infrastructure is changing has also led to a greater demand for radio cabs. Suburbs in cities like New Delhi and Mumbai are getting bigger, companies are moving their offices there in search of more space. Moreover, new airports like in Hyderabad and Bangalore have come up outside the city. Business travelers find radio cabs convenient to go for their business meetings in town.
According to a study carried out by Dare, a magazine for entrepreneurs, radio taxis will become common in five major cities and 12 smaller ones in the country by 2010 when their number will be around 172,000.
Naturally, many are willing to give the business of radio cabs a shot. Almost a dozen operators have got the licence to operate radio cabs in New Delhi. (The business is regulated and the state hands out licences.) Mumbai, in contrast, has given out only three. That is understandable: The taxis in the city are unionised and have lobbied hard to keep radio cabs out of Mumbai roads.
Other cities that have opened the gates to radio cabs are Bangalore, Chandigarh, Gurgaon, Faridabad and Hyderabad. And more are expected to join the bandwagon soon.
New Delhi-based Mega Corp, which was the first to start radio cab service in the country under its brand Megacabs almost five years ago, plans to raise its fleet from 1,000 cars now to 20,000 in the next 3-4 years. It has the licence to operate in New Delhi, Mumbai, Chandigarh, Gurgaon and Faridabad. Meru Cabs will invest Rs 100 crore to double its fleet to 4,000 by March 2009. And Carzonrent (India), which runs Easycabs, too plans to expand its fleet to 3,000 by next year.
Apart from passengers, these cabs offer advertising space to other brands. "We can give 30-40 per cent coverage to brands on the car. It is a good outdoor medium for advertisers," says Mega Corp Managing Director Kunal Lalani. Operators need to keep space on the car to display their contact number - often the only way they advertise.
business is not a cakewalk. Capital investments in fleets
(fuel-efficient Suzuki and Tata cars are a favourite), call centres and
monitoring equipment are substantial. Companies also need to find
parking slots for their cars. Some of them have taken land in farm
houses and empty mill land for this purpose.
Breakeven, thus, comes from scale. Industry experts suggest that while 100 cars would be enough in a city like Chandigarh, the number could climb to 350 in Hyderabad and over 1,000 in New Delhi - the most crowded market of all cities.
So, what does it mean for the neighbourhood taxi operator and the black and yellow cabs? Says Mohan Singh, a New Delhi-based taxi chauffeur: "Regular taxis are more easily available and are not as expensive as radio cabs. Hence, we will continue to be popular mode of transport." Other taxi chauffeurs share his optimism. Some have even started displaying their lower fares on the car. Are these the first signs of competition?