Tuesday, November 17, 2009

Taxi Ridership Falls...

Straits Times taxi ridership falls

So what is the surprise? Taxi ridership fell from 11.3 million rides in 2007 to 10.9 million in 2008. Taxi driver's income (those driving 10 hours a day) shrunk 6% to $2250 a month.

I used to take taxis everyday to work 5 years ago. But my taxi fare went up from $16 to $26 over the years! The last fare hikes in 2007 pushed me to take buses and the MRT.

The following postings from my blog:

So who wanted the fare increase? Recall that the cab drivers were against the fare increase which caused them to lose customers during the peak hours. There is now a deadweight loss as the capacity exceeds demand during these hours and many cabs lay idle during peak periods except on rainy days.

Goodbye taxi hello bus + MRT. I love taking taxis to work. They get me there fresh, ready and energetic. The buses and MRT packed like sardine cans drain my energy. However, I didn't have a choice but to switch because the hikes at the end of 2007 were hefty:

Current Rate.............................................New Rate
City Area Surcharge $1 peak hour to $3.00 (5pm till midnight, Mon to Sat)

Late Night Charge staggered 10% to 50%--------- 50% of metered fare (12am till 5:59am)
Peak Period Surcharge $2.00 ---------35% of metered fare (7am till 9:30am, 5pm till 8pm)
Flagged Down Fare $2.50 for first km ---------$2.80 for first km
Waiting time $0.10 every 25s ----- $0.20 every 45s

Distance Rate (<=10km) $0.10 every 210 m-------$0.20 every 385m from 2nd km till 10km
Distance Rate (>10km) $0.10 every 175 m ------$0.20 every 330m above 10km
Call Booking (prime time) $4.00 ------$3.50 (7am to 9:30am, 5pm to 11pm , weekdays)

Call Booking (other time) $2.50 ------$2.50

Singaporeans pay more for fewer taxi rides. Taxi drivers make less income. So who or what is doing better? Answer here.

Recently, LTA rejected the application to start another taxi company[Link]. But I think the solution is to cut out the unnecessary middle man who makes a hefty profit from taxi rentals.




It is a case of high fares killing the goose that laid the golden
eggs.
The Land Transport Authority should realise the current system is not
sustainable.
Privately owned taxis do not require a layer of management and
its associated costs. In fact, the idea of taking home all the fare spurs harder
work, as in any free enterprise.
- Jack Chew's Forum Letter[Link]

The LTA eliminated independent privately owned taxis leading to almost full corporatisation of the taxi business. The end result is higher taxi fares and lower income for taxi drivers.



"Taxicabs of Hong Kong provide a taxi system. Most taxis are independently owned and operated" Wikipedia on Taxicabs of Hong Kong.
.
In many cities, taxi company operate as cooperatives[example here] so that taxi drivers can earn a better income. But in Singapore, it is better, cheaper and faster so that corporations can make more rent.

21 comments:

Anonymous said...

The taxi companies also have many more taxis than there are drivers wanting to rent.

Seems like it is lose lose lose, for the taxi company, driver and passengers.

So the system may need to be overhauled, not small fixes like surcharges, incentives etc.

Also cars have become cheaper, cheaper than even in 1990 when I bought my first new car.

But of course usage costs is a different story.

Anonymous said...

The middleman with (links to govt) and with the help of govt legislation is profiteering here.

Sylvester Lim said...

Does it take an act of legislation for GIC to make money in Singapore? Are they capable of competing in a free market as well as in overseas market?

Anonymous said...

Lucky...This was taken from your link. "In Singapore, revenue from the taxi business increased by 2.0% to $159.4 million due
mainly to a higher volume of cashless transactions and a larger operating fleet."

It shows that taxi drivers earned less but Delgro recorded a higher profit for 2009. This figures of $150.4 million came from the pockets of commuters and the sweat of the taxi drivers.

Anonymous said...

I would think that to combat road congestion, the government shd improve public transport and that includes taxis. Make public transport/taxi cheap n accessable and I think a substantial no. of car owners/commuters will switch to them.

Anonymous said...

what's the official reason for not implementing a private taxi licences btw?

greyfox said...

Compared to major cities in developed countries, taxi fare in Singapore is quite affordable. The public transport system is a very acceptable and cheap alternative.

It's a pity fare increase benefit taxi companies more than drivers. Conversely, drop in ridership seems to affect drivers more than taxi companies.

LuckySingaporean said...

Greyfox,

I can agree that it is more affordable than in many countries. However, it has gotten less affordable and income of drivers are falling.

Anonymous said...

Taxi drivers like everyone alive have to pay GST. Taxi companies need to pay corporate tax. So simply put........ its chiak ka liao.

Anonymous said...

You are right. The increase in prices have not benefitted both the drivers and the passenger. While the able have an option, like getting up early to take the mrt or bus, the sick have no choice. The need a cab to go for hospital appointments, and that hurts. If my wife have an early morning appointment, it costs more than 20 dollars from Bedok to SGH, single trip.

Roy said...

Greyfox

Which other developed countries are we talking about?

Rather than comparing ourselves with America or European countries, why don't we look at other Asian cities?

Yes Tokyo's cab fares are higher, but we do not have the fantastic train network nor do we earn Yen. Other than in Japan, I doubt there are many other Asian cities where a cab ride cost so much like in Singapore yet offer so little in comfort.

I just came back from Seoul and Hong Kong. They have better cab services and lower fares. Not many other cities in Asia are more developed than HK and Seoul.

Anonymous said...

It could also be due to the increase car ownership leading to lower taxi ridership.

In that sense, I think the article was not balanced.

Ghost said...

The biggest problem for taxi-drivers is the daily rental. That comes around $100 per day. That’s around $3000 in rent per month, per taxi for the taxi company! To lower the taxi fares is actually a pretty simple thing; all you need to do is to lower the daily rental and BINGO!

Anonymous said...

Plus the diesel cost and other indirect costs of running a cab. You also have to factor in about 10hours of productive driving and the factor that you only got so much time for ferrying people in a day. I learnt that driving a cab is not too bad (from cab drivers), but it would be a better career choice when you are semi-retired and not trying to feed the family when your children are still young.

That is from the older cab drivers, but I figure that my generation and subsequent generations may find that being a cab driver may not be that attractive at all unless other mitigating factors are in your favour e.g. you strike toto and you have no financial concerns. : )

Anonymous said...

I used to take taxi a few times a month and often give our taxi driver a dollar or two as a reward to get me to a destination on time.
Since it is now so expensive to take a cab, I cut down to less than ten rides a year and no tips. Not at all now. I also told my dad not to give any tips when he take taxi.

Say no to nonsense said...

Anony 15:52 raise a very interesting point... is there any other reason why taxi ridership goes down other than the fare hike?

A quick googling gives me the following data...

In 2007, we have a population of 4,588,000 vs car population of 517,000, with the cab population at 24,446. That will translate car ownership to be at 11.2%.

In 2008, we have a population of 4,839,000 vs car population of 553,000, with the cab population at 24,300. That will translate car ownership to be at 11.4%.

Hence, it is inconclusive to say that the reduction in taxi ridership by 3.6% is sorely down to the fare hike, as the car ownership did increase by 1.8%. However, what we can be certain is, the taxi driver income went down significantly.

Another quick googling give me some links below...

Fare hikes is suppose to help cabbies...
http://www.channelnewsasia.com/stories/singaporelocalnews/view/315171/1/.html

Cabbies income unaffected by fare hikes???
http://www.asiaone.com/Motoring/News/Story/A1Story20080104-43663.html

Link 2 is totally nonsense as the verdict has already came out. This just goes on the show the woeful standard of reporting from our MSM... writing unjustify articles so as to achieve their own agenda...

Link 1 just shows how hard they are trying to justify their actions. To me, the cab companies (or maybe just comfort delgro) are shirking resposibilities of higher operational cost (high pump price and ERP) by passing the tab to the end consumers, irregardless of the causes and consequences.

End results, cabbies income falls (contrary to what was reported) and consumers gotta fork out more. Meanwhile, Comfort Delgro is laughing happily to the bank...

Hence, what purpose does the fare hike serves? who benefited?
I suppose your guess is as good as mine...

Anonymous said...

Well, this is expected when the whole country is run like a corporation. It can only change when the country is run by the people and for the people.

Anonymous said...

"Hence, it is inconclusive to say that the reduction in taxi ridership by 3.6% is sorely down to the fare hike, as the car ownership did increase by 1.8%. However, what we can be certain is, the taxi driver income went down significantly."

but the increased in car ownership could be due to increased taxi fares i.e. it made more sense to own a car than to continue taking taxi becos of the increased fares.

i still think there is a strong correlation between increased fares and decresed ridership.

the fact that the country is bulging at the seams with new intakes of foreigners and yet ridership drops show taxi industry is in serious trouble.

it simply doesn't make sense that taxi companies can turn in higher profits when ridership drops.

greyfox said...

Roy,

The only major cities comparable to Singapore in terms of transport infrastructure are Seoul, Hong Kong and perhaps Taipei. The taxi fares in those cities are quite comparable. Even if cheaper, not by a big margin.

The interesting thing is, I find the taxi drivers in HK very entreprenuerial. If you book a taxi you get discount, instead of paying booking fee like in Singapore. Instead of calling the booking line, you call the drivers mobile phone directly. This is for booking in advance. If he can't do it, he will pass the job to a mate of his. This makes them more productive and save them from paying service fee to the taxi company. They share the savings with the passengers. A HK friend of mine was surprised when I told him we have to pay booking fee for taxi in Singapore. One has to think out of the box sometimes.

Roy said...

Greyfox

So in Asia, amongst the developed cities, Singapore has the 2ns most expensive cab fares.

I just came back from Seoul less than 3 weeks ago. Over short distance, less than 10km, Seoul's cab fare is cheaper than SG by a ridiculous margin. Long distance I didn't try, however, considering a trip from Changi to Bouna Vista cost me $31 at peak hours last week without ERP, I am not holding my breadth. For Hongkong, I know a trip from their Airport to Kowloon cost about $40 despite the fact that the distance is LONG.

My bottomline is, we are a country with the most expensive Transport Minister in the world. We should strive for excellence and I feel that motherhood statements you made : "Compared to major cities in developed countries, taxi fare in Singapore is quite affordable. The public transport system is a very acceptable and cheap alternative." is somewhat unfathomably complacent.

Say no to nonsense said...

Hi Anony 5:30,

"but the increased in car ownership could be due to increased taxi fares i.e. it made more sense to own a car than to continue taking taxi becos of the increased fares."

I am afraid we do not have a free market in Singapore... The total number of cars is dictated by the govt, as they are the ones who decide upon the number of COEs, which is based on the number of cars deregistered. Hence, even though individual might resort to buying a car due to cabs getting more expensive... on a macro level, I suppose it is insignificant.

"it simply doesn't make sense that taxi companies can turn in higher profits when ridership drops."

Taxi companies' profit is not based on ridership... rather, it is based on rental. Hence, as long as there are people renting the cabs, their profit will not be compromise. I have yet to take a closer look at the profit breakdown of comfort, as comfort should have mutiple sources of income. But judging from a 6% drop in cabbie wages based upon a 3.6% drop in ridership, I would think the likely cause might be due to more people taking up the cabby job... adding further competition to an already over saturated market.