The formation of passenger loyalty: Differences between ride-hailing and traditional taxi services

Abstract Background Taxi services have played an essential role in the transport system as they contribute to urban mobility. With the rapid development of information and communication technologies, ride-hailing services, one of the typical sharing economy forms of road transport, have become increasingly popular. The uptake of app-based technologies that support the sharing economy for transport is considered to threaten the future of traditional taxi services directly. Aim This study aims to compare the direct and indirect effects of factors such as perceived benefits of booking method, perceived safety, involvement and satisfaction on the loyalty of passengers to ride-hailing and traditional taxi services. Method A structural equation model of the relationships among these constructs was tested using data collected from 545 respondents (263 ride-hailing passengers and 282 traditional taxi passengers) who have used these services at least once a month in Vietnam. Results The results have confirmed that there was a strong relationship between satisfaction and loyalty for ride-hailing as well as traditional taxi services. It was also evident that the variable describing the perceived benefits of booking method was the second strongest factor influencing traditional taxi passengers’ loyalty while the perception of safety was the second most important determinant of ride-hailing passengers’ loyalty. Conclusions Results from this investigation offer insights for the development of strategies aiming at increasing the loyalty of ride-hailing as well as traditional taxi users. By focusing on the strengths and improving the weaknesses of each transport service, these two services can be complementary and co-existing without cannibalising each other. In turn this will lead to a transport system capable to serve all types of users.