Kakao to Launch Premium Taxi Service

Messaging app giant Kakao has caved in to government and taxi-lobby pressure and will now only launch a premium ride-hailing service that charges 20 to 40 percent more than regular cabs.

Kakao initially wanted to squeeze into the market by offering affordable rides amid mounting complaints from commuters who are tired of poor service from conventional taxis, which often refuse rides late at night. But hysterical protests from taxi drivers, including a couple of self-immolations, scuppered the plans.

Kakao said Sunday that it will launch the service, to be called Ryan Taxi, next month in conjunction with around 100 cab companies in Seoul, Incheon and other satellite cities in Gyeonggi Province. It will deploy 800 Carnival or Starex vans.

Kakao also plans to launch a premium taxi service with some 2,000 midsize cabs later this year, double the fleet of its existing ride-hailing app TADA, whose vans charge 20 to 30 percent more than normal taxis.

Last year Kakao promised a ride-hailing service that would be 30 percent cheaper than ordinary cabs, giving rise to hopes that ordinary taxis would get their act together in response.

Overseas, Uber, China's Didi Chuxing and Grab in Southeast Asia are often cheaper than ordinary taxis unless local taxi mafias or government disapproval of their sometimes cutthroat business models get in the way.

Here, the Ministry of Land, Infrastructure and Transport has surrendered almost entirely to pressure from established taxi firms and drivers and decided that any ride-hailing companies need to buy taxi-operating licenses.

Other potential providers whose pockets are not as deep as Kakao's have been stymied. One staffer at a carpooling start-up said, "There is no need to develop innovative business models if everyone must compete to obtain taxi-operating licenses," which are limited to a certain number per year.