The dying monopoly of airport taxis

Rama Ariadi / Khmer Times No Comments Share:
Licensed taxis no longer have the monopoly on downtown rides – as evidenced by the long line of taxis waiting for prospective passengers, most of whom chose to walk outside of the airport to get more options with lower fares. KT/Rama Ariadi

If a decade ago people still had to fight over very limited number of public utility vehicles, the present day’s heavy traffic flow at the Russian Federation Boulevard is a solid proof of how far the Cambodian capital has gone in terms of its transportation system. There are just so many choices travelers can take from the Phnom Penh International Airport to anywhere in the capital now – airport taxis, tuk-tuk, rickshaws, and vehicles from ride-hailing services. But of course, the fares vary – quite significantly, Rama Ariadi writes.

To those who aren’t convinced that change is the only constant thing, Phnom Penh’s International Airport is one of the best examples of the analogy. What was once a simple airstrip that serves both military transport planes and scheduled passenger services has exploded in size and capacity — turning the once-dilapidated international port of entry into a highly efficient, steel-and-glass edifice that saw the departure and arrival of more than 4.2 million passengers in 2017 alone. Franchises from Starbucks to Dairy Queen have set up shops within the airport, adding an international flavour that is most welcomed by the ever increasing number of tourists and business travelers that pass through the airport’s international departure hall.

Connectivity have also been improved — as passengers are now flooded with options to get to and from the airport from Phnom Penh’s central business districts and tourist hotspots. Regular bus shuttles? Check. Ride-shares? Check. Traditional tuk-tuks? They never left the vicinity. But the biggest change that generated the most fanfare was the inauguration of the airport shuttle that links Phnom Penh Railway Station downtown to the airport. But the fanfare was limited to passengers, as the introduction of the service is starting to eat away on the passenger shares of a group, who had once monopolised the most comfortable option of getting to the centre of the city — that are, licensed airport taxi drivers.

Nov Pholla was one of those who were lured by the prospects of earning a higher income by becoming a licensed taxi driver at the airport, when these taxis were the only comfortable choice of getting out of the airport. “I started working here three years ago,” said Mr Pholla. “Before that, I worked as a driver for a private company for five years, where I made about $150 a month on average.”

Before the arrival of ride-shares and what not, business was good for Mr Pholla. After all, in a country where haggling is the norm, not the exception, licensed airport taxis offer a degree of certainty as they charge a flat rate for a roughly 10-kilometre ride west to the centre of the city. Coupled with a well-maintained fleet that are operated by drivers who know basic English, it wasn’t a hard choice to make for the newly arrived. Even now, many travelers who aren’t too fussed about shelling some extra cash to take the guesswork out of their commute still opt for these licensed taxis.

“These days, however, more people are taking the airport shuttle train, as for the time being the service is still provided free of charge,” said Mr Pholla.

That said, how long will they be able to survive amidst the increasing competition from other similar service providers, which has their own advantages, the biggest among which is the price point? One may argue that given the huge pricing gap, these airport taxis may soon become obsolete in the face of cheaper, faster alternatives. Consider this fact — a one-way ride to the southern suburbs costs a flat-rate of $15. Should one opt for a licensed tuk-tuk from the airport, the price goes down to $9, which means that the price per kilometre drops to about $1 for a one-way ride from the airport. And that’s not even the cheapest ride there is.

The same trip on a metered rickshaw that could be easily hailed using the numerous mobile application available in Cambodia can be availed for as low as $4.

So what makes the trip from Phnom Penh’s airport to its’ beating heart through the airport taxis so much more expensive? Unfortunately, when Khmer Times attempted to get the fare breakdown and rationale behind maintaining the higher price point amidst the fierce competition, the president of the Taxi Association of Pochentong International Airport declined to comment on the matter.

As such, whether the justification for main higher price point is a part of its strategy to maintain a significant profit margin, or as means to finance the cost for further improvements to its services is still up for further questioning. That said, one cannot really underestimate the impact of pricing on consumer behaviour, as well as consumers’ perception of the price range.

If the higher price point is justified by a continued improvement in its service and passenger experience that positively sets it apart from its competitors, then these taxis may stand a chance of weathering the storm.

But without such improvements, the only sustainable way to survive is to make fares more competitive, as lower fares do not necessarily equate to lower profits — as the economy of scale principle dictates.

A refusal to acknowledge these factors may lead these licensed taxis to become obsolete — an archaic relic that will eventually disappear along with what remains of the old facade, and the decaying fuselages of abandoned aircrafts, along the Pochentong airstrip.

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