Singapore’s updated P2P policy bodes well for taxi operators

Big win for ComfortDelGro, the largest taxi operator in the city-state.

New regulatory and inspection protocols for taxi operators put in place by Singapore’s Land Transport Authority (LTA) would cut operating costs and improve services, according to RHB Group.

The LTA announced that it will be increasing the statutory lifespan of diesel, petrol and hybrid taxis to 10 years from eight years currently as part of its ongoing review of the point-to-point (P2P) regulatory and operational framework.
 
RHB analyst Shekhar Jaiswal said the policy update should help taxi operators recover the cost of vehicles over a longer period, lowering taxi rentals and bringing them to par with private hire cars (PHC) operators. 

Overall, Jaiswal sees the move bringing positive changes to the taxi industry especially for SGX-listed ComfortDelGro which currently operates the largest fleet of taxis in Singapore.

“LTA will ensure that the cost savings, after accounting for additional maintenance expenses from the increased statutory lifespan, are passed on to taxi drivers,” he said. “This, along with the plan to streamline the Taxi Driver’s Vocational Licence (TDVL) training curriculum to lower the effort and cost to obtain the licence, should help address the availability of drivers, which is one of the key concerns for taxi operators.”

Inspections for taxis under three years old were also reduced to once a year from every six months, in a move that RHB said will allow operators to minimise operational downtime and maintenance costs for newer taxis, making new vehicle rentals competitive. Smaller taxi operators would also no longer be required to provide call-booking services.

In contrast, chauffeured PHCs over ten years old would see increased inspection frequency from once a year to every six months, potentially adding to operating costs that could translate to increased rental rates for older vehicles.

RHB projected ComfortDelGro to post “good profit” this year in part due to the anticipated strong tax earnings and rail revenues from its Singapore market.