Taxi-hailing platforms are expanding their lineup of high-end services, including large and premium options, to strengthen profitability.
Uber Taxi introduced Premier Van, a large van service, on the 1st of this month. Premier Van can carry up to five passengers and hold up to four 30-inch suitcases. It adds a higher-priced lineup to Uber Black, the existing premium sedan taxi-hailing service. With this, major operators including Kakao Mobility, Tada, and Uber now all operate large and premium taxi services.
The reason taxi-hailing platform companies are introducing large and premium services is tied to securing profitability. Unlike regular mid-size taxis, high-end taxis are subject to a self-reported fare system that allows operators to set fares directly. In Seoul, the daytime base fare for a mid-size taxi is 4,800 won for up to 1.6 km, with 100 won added per 131 meters thereafter. By contrast, the premium service under Tada's standard is 5,000 won for up to 0.75 km, with about 100 won per 123 meters thereafter.
In practice, the fare gap is also large. As of 1:30 p.m. on the 24th, a trip from Gangnam Station to Gwanghwamun Station costs about 20,300 won for a regular taxi, while the premium van taxi Kakao Venti is about 26,900 won and the premium sedan taxi Kakao Black is about 49,800 won. Depending on the taxi type, the price ranges from 1.2 times to 2.5 times.
A flexible pricing system that allows surcharges and discounts also applies. Kakao Mobility, Tada, and Uber operate flexible pricing ranging from about 0.7 times to as much as 4 times. During commuting hours or late at night when calls surge, it becomes possible to secure a per-customer fare up to three to four times higher than a regular taxi.
On the demand side, conditions favor premium services. Demand remains steady for corporate business trips and VIP protocol, where price sensitivity is low. In addition, the recent increase in outbound travelers and foreign tourists is positive.
However, the industry sees different circumstances for each operator. With about a 90% share of the taxi-hailing market, Kakao Mobility is seeking to maximize revenue through high-end services based on the users it has already secured in the taxi-hailing market. Tada and Uber, having fallen behind Kakao Mobility in regular taxis, urgently need to find a pathway through premium services to ensure business sustainability.
Experts say differentiation strategies will be crucial in future competition. Yoon Dong-yeol, a business administration professor at Konkuk University, said, "For Tada and Uber to respond to Kakao Mobility, they need a more differentiated strategy rather than stopping at simple premium or large services," adding, "They should target niche markets aimed at specific demand segments such as travelers or people with disabilities."