PT Blue Bird Tbk (BIRD), the largest taxi operator in Indonesia, this year is to lower its capital expenditure to Rp 1 trillion – Rp 1.2 trillion, compared to last year’s Rp 1.5 trillion. Management reasoned that the company is to ease expansion because the Indonesian economy has not recovered from the economic slowdown. But the tight competition with online transport services, such as Uber and Grab is also a factor that suppresses the performance of the company and hinder its expansion.
Conventional taxi market share eroded by the presence of online transport services. Customers choose the online service because it offers cheaper rates, better service, and ease of reservation. Recent polemic on online transportation services will soon be resolved with the new government provisions that demand all online transportation service providers to meet a number of rules, such as to test the feasibility of the vehicle (KIR) and cooperate with the public transport service providers.
Taxi’s business model requiring large capital has already been outdated. Conventional transportation service providers such as Blue Bird have to be ready to make large efficiency efforts, tariff adjustments, and revolutionize its business if it does not want its performance to continue to decline in the future. (*)
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