Transport app provider GrabTaxi is tying up with a rental company, Prime, to grow a fleet of on-call taxis, The Straits Times reported. The move follows an initiative by rival Uber, which has started its own fleet of such taxis. These cabs are not allowed to ply for passengers, but cater to a growing cohort of commuters who hail a cab with their phones.

GrabTaxi general manager Jerry Lim said, "We are still not looking at owning our own assets. So unlike the Uber model, we are not going to be in competition with the rental companies, but working with them to push out vehicles."

Trade observers said the new operating model offers app providers a more lucrative revenue stream than the 30 cents they make from each taxi booking.

As for Prime, it makes money from leasing cars to drivers. For instance, the brand new Toyota Corolla Axio Hybrid is $80 per day, versus a rental of $105 if the car were a regular taxi.

Prime Group Chairman Mr. Neo predicts this so-called parallel taxi service is the future. "There are drivers who don't want to ply the streets looking for fares, who don't want to join queues, who are put off by all the standards and requirements," Mr. Neo said. 

Industry watchers expect the scheme to be attractive to taxi drivers who dislike high taxi rental rates and plying 300km to 500km a day for fares. Hence it will compete keenly with taxi companies for drivers.

ComfortDelGro, Singapore's biggest taxi firm, seems nonchalant though. Its spokesman said, "Demand for our call bookings remains strong as we invest in new apps and service enhancements." Last year, it clocked a record 35.6 million bookings - 10 percent more than the previous record in 2013.