Radio Taxi : Way to Go!

It was an idea whose time seemed to have ripened. The capitals harried
public could dial a number and, presto, a taxi appeared at the doorstep. Sure,
they charged Rs 2 more per km than the black and yellow taxis. But unlike
run-of-the-mill cabs, these taxis had drivers who were polite and well-mannered,
and the taxis themselves were equipped with digital fare meters that printed out
receipts and were tracked by a 24-hour control room with a GPS. All said and
done, Delhis initial fleet of 300-odd radio cabs promised uniform tariffs,
reliability and security. But three years after radio taxi services were
introduced in Delhi in the year 2000 as a pilot project by the Sheila Dixit-led
government, radio taxis were crawling in the slow lane. Taxi operators took
three years to get licenses from the state government. But they started losing
money hand over fist, and many were forced to shut down operations.

However, the concept again took flight in 2006-07, with many prominent
players setting up operations in multiple cities. With the Commonwealth Games
around the corner and considerable foreign guests expected, the radio taxi plan
finally got the much-needed push. International companies, including Hertz and
Supercab were also given radio taxi licenses. Hence, the local players had to
match their standards and build a sustainable business model. Now a handful of
strong local radio taxi operators such as Easycabs, Mega Cabs, Meru Cabs,
DelhiCabs and Quick cabs rule the roost. While most of these players such as
DelhiCabs and Mega Cabs have focused operations in DelhiNCR, they are now
slowly diversifying their operations in other cities across the country.

Size of Operations

The radio taxi industry is at its peak and is growing. However, according to
the players the demand far exceeds what they are able to meet at the moment.
Though it is still rather nascent to predict the overall market size, going by
the present demand and booking traffic, players have been able to narrow in on
the potential number of radio cabs that will ply the Indian roads. At present
there are about 5000-6,000 radio taxis in India. But the potential market is
that of 1 lakh taxis, says Binod Mishra, GM, fleet and operations, Mega Cabs
that was one of the earliest players to start radio cab operations back in 2002,
and has operations in Delhi, Amritsar, Ludhiana, Mohali and Mumbai. With a
present fleet size of 1,000 taxis, Mega Cabs plans to expand its operations in
Kolkata too.

Looking at the success of players such as Mega Cabs in class B cities such as
Ludhiana and Amritsar, other players too are encouraged to tap these markets.
Another key player Easycabs owned by Carzonrent India launched operations with a
pilot project in Chandigarh in 2006 with just fifty cabs. After the success
there, the company launched operations in Delhi the following year with 550
cabs. Today, Easycabs has operations in other cities such as Bangalore and
Hyderabad with a total fleet size of 1,700 taxis. The group Carzonrent India
plans to expand the fleet to 5,000 cars across thirteen cities in India to meet
the growing demand. Over the next couple of years we plan to expand our
Easycabs fleet to 5,000. We have big plans to expand in the NCR in terms of
expanding our fleet size from 550 to 1,200 by the next financial year, says
Rajesh Munjal, head, technology, Easycabs. Another prominent player, Meru Cabs,
has a fleet size of 3,300 radio taxis and operations in four cities. A late
entrant in the radio taxi segment Meru, today has the largest fleet of radio
taxis across the country, and plans to expand further.

The Taxi Management Software system has helped us to record all details related to booking, dispatch and supervision. Rajesh Munjal, head technology, Easycabs	At present there are about 5000-6000 radio taxis in India. But the potential market is that of 1 lakh taxis. Binod Mishra, GM, fleet and operations, Mega Cabs

In addition to ease of booking, safety and customer service, the accurate and
transparent fare meter are some of the aspects that have appealed to customers.
The success of these select few is prompting other players, especially in the
car rental industry, to diversify into the radio taxi segment. While some of
these companies have already procured licenses they are waiting for the market
to mature further before jumping on to the bandwagon. One such premium car
rental company, Ecorentacar has operations in five major metros and has plans to
diversify into the radio taxi segment in the next 5-6 months. There was an
initial euphoria and everyone was excited but within two years almost 30% of the
players have shut down. The market needs to mature further and the present
credit crunch also needs to ease a bit before we enter the fray, says Rajesh
Loomba, MD, Eco Rent a Car. Nevertheless, Loomba has charted plans to invest Rs
25 crore in the first year in every metro, and build a fleet of 1,500-2,000
radio cabs.

How it Works

Earlier features such as GPS-enabled fleet, panic buttons, round-the-clock
call centers were considered frills and the transport department had left these
to the discretion of the operators. Today, these very same technologies are
central to the operations of the radio taxi players and each of them have set up
a robust back-end IT infrastructure and deployed sophisticated fleet management
applications to manage the rising scale of their operations and improve customer
service. Whats more interesting is how the entire system actually works.

All the radio taxi providers have set up an integrated customer facing
platform through which a customer can book a cab. Bookings made through common
dial-in numbers across the country, SMS booking requests, IVRS based booking,
bookings made through online booking engines are all integrated and reflect in
the Taxi Dispatch System (TDS), which is an automated online booking, fleet
management and taxi dispatch application. Once the booking is confirmed, a call
centre agent sends an SMS or calls the customer with the details about the cab,
the driver, the pick-up time and venue.

So how does the TDS communicate with the cabs that are on the move across the
city? Every taxi is installed with a mobile data terminal (MDT) which has a
built-in microprocessor and a display screen, and has GPS and GPRS connectivity.
Through the GPS, the cabs can be tracked periodically over the vehicle tracking
system and communication with the cabs is carried out over the GPRS network. The
MDT has been programmed in such a way that in every sixty seconds it
communicates with the server and gives a status of the vehicle and enables
real-time tracking. This data transmitted by the MDT including the name of the
driver, his mobile number, the taxi number, travel details, etc, is then
reflected on the TDS or taxi management system (TMS) at the back-end. The
two-way non-voice/data communication with the cab driver is carried out with the
help of the MDT which displays the customer pick-up details.

In addition, each radio taxi has a Digital Fare Meter and the MDTs are
integrated with these meters. As a result the fare post every trip is recorded
at the back-end and also the TDS is able to determine on a real time basis
whether a cab is free for the next dispatch. Also, at the end of each trip, a
complete history of the trip including the pick-up destination, route taken,
kilometres covered, time of billing, etc, is recorded at the back-end and can be
recalled at any time in future. This helps a robust MIS within the operations
team of the company, says Nilesh Sangoi, CIO, Meru Cabs. Some companies have
customized their TDS to enable history tracking for three months and even record
minor details of every trip. Not just this, the history tracking feature has
played the role of a rudimentary CRM tool. Both Meru as well as Mega Cabs have
booking forms in their TMS, which display the previous five trips of a regular
customer in a drop down menu whenever he calls. We have not paid much attention
to CRM tools but this TDS/TMS software has helped us so far in recording all
details related to booking, dispatch and supervision, says Munjal.

To provide better navigational capabilities and enable real-time vehicle
tracking the radio taxi operators also deploy GIS local digital mapping which is
another cutting edge technology. The GPS system has a pre-defined radius of 8
kms and it carries out an aerial search for free cabs. When a customer contacts
the call center to book a cab, the TDS and the MDT generate a set of algorithms
with the help of smart business analytics that locates the cab closest to the
customer pick-up destination and accordingly dispatches it. This helps the
company reduce the non-paid kilometre distance which results in cost savings and
less carbon emissions, says Sangoi.

Most radio taxi players have also installed immobilizer switches, which
automatically switch off the vehicles ignition when pressed by the passenger or
cab driver. The car then cant be switched on again using the key.

IT Infrastructure

Looking at the potential of this industry, many IT companies have come forth
to develop software applications such as the TDS to help radio cab players
improve their operations. One such player, Syntel, has developed a Taxi
Management Software under a venture named Mpower (Arya OmniTalk) which is being
used by all the leading radio cab operators.

Apart from this all the players have set up captive call centers in each city
of operation. The call centers are decentralized to provide local support in
four cities. The call centers work in three shifts and every shift has on an
average twenty-five executives to handle bookings and dispatch, says Sangoi.
Similarly, Mega Cabs has a ten-seat captive call center in each city to provide
local language support. These call centers handle a traffic of anywhere between
5,000-10,000 calls per day per city.

The market needs to mature further and the present credit crunch also needs to ease a bit before we enter the fray Rajesh Loomba, MD, Eco Rent a Car	Smart business analytics helps us reduce the non-paid kilometer distance which results in cost savings and less carbon emissions. Nilesh Sangoi, CIO, Meru Cabs

While most players are still using best-of-breed technologies for both their
software and hardware needs, players such as Meru have partnered with HP and
Dell for their server and storage needs. All the radio cab operators have local
servers in each city and are in the process of consolidating them. Easycabs has
about forty servers deployed across the country. It has already consolidated
certain functions such as mail servers, HR and accounting applications but
continues to adopt the decentralized model for certain functions such local
fleet management and dispatch. It is now in the process of setting up a
centralized data center at its corporate office at Jhandewala in Delhi.
Similarly, Mega Cabs too has city specific servers and plans to build a data
center in Delhi. It going a step further and is exploring concepts such as
virtualization, consolidation, and SOA to integrate all its enterprise systems
and processes to establish an enterprise bus.

Future Outlook

While the future does look bright for the radio taxi industry, there are
certain technological challenges that it faces. For instance, the GPRS
connectivity in certain cities still has black holes Using alternate modes of
communication such as SMS call- back is still an expensive option for these
players that work on extremely low margins. Besides, there is very little
incentive for them to upgrade to newer technology platforms such as 3G, due to
the high device and service costs involved. Meanwhile, they continue to optimize
their operations and improve customer service by reducing call periods and hold
times by trying to create customer history and improve training of call centre
staff. In a view to further optimize costs, the major players have embarked on a
consolidation and virtualization strategy for the next fiscal. Going forward,
they plan to improve the navigational capabilities by partnering with companies
specializing in mapping and GIS so as to give a push to the self-drive car
rental concept within the country.

This industry has realized that it is difficult to build a scalable operation
with thousands of cabs without having in place a robust IT system. And they have
ensured that they have got their technology right now when they are poised for
growth.

Priya Kekre

priyak@cybermedia.co.in