long term business model in doubt, page-5

CAB revenue:

1. Taxi service fee income $90m
2. Members taxi related services $92m

To work through CAB's analysis, one needs to understand the taxi industry as a whole, including its size, and the breakdown of components within the industry.

More specifically, one needs to understand the drivers/factors in relation to item 1 and item 2. They are separate issues, although there is an interlink between them. Specifically, why are such services required?

Not many people realise that cash still makes up over 50% of the total payment system relating to taxis. You need to understand this to understand why the new mobile apps are getting support from serious investors.

The next question to be asked is why the little blue card (and the most recent CAB smartcards) is so widely adopted, despite the exorbitant 10% surcharge. Just saying that CAB has a monopoly is not a satisfactory answer without first asking why the alleged monopoly arose in the first place. Many people gloss over the fact that cash has always been a competitor to cards. We need to understand what value is being delivered to whom (and the hint is that the value delivered is not necessarily value delivered to the taxi customer).

Once that is understood, then one is in a position to understand the impact (if any) of the new mobile apps and the purported legislative caps. Specifically, can the new mobile apps deliver the same value/satisfy the same needs of current users of the little blue card? Again, I reiterate that current users need not be restricted to the actual customer in the taxi.

Not advocating a buy, just want to get discussion going.