Monday, December 3, 2007

Oil prices, cab companies and cab drivers

S'pore's taxi fares likely to go up soon

TAXI drivers want it and their associations have asked for it, so all that remains is for the biggest taxi operator ComfortDelGro to go ahead and do it - raise taxi fares that is.

All the signs point to it happening, and soon. A year after the last increase, which saw the flag-down rate go up by 10 cents to at least $2.50 and peak period surcharge double to $2, sources say a bigger jump is imminent.

The flag-down fare is expected to rise by 30 cents, bringing the minimum starting fare to $2.80.

Newer taxis such as the Hyundai Sonata and Kia Magentis charge 20 cents more, so their flag-down rate should hit $3, The Straits Times understands.Distance and time-based rates are also expected to change. Currently, the meter advances by 10 cents every 210m or every 25 seconds of waiting. After 10km, it jumps 10 cents every 175m.

Industry observers expect leading operator ComfortDelGro to make the first move this month, but the company has remained mum about its plans.

'Fare adjustment is a commercially sensitive topic, so we cannot comment on it,' ComfortDelGro spokesman Tammy Tan said.

For the past three weeks or so, the company - which has a fleet of 15,000 taxis - has been sending its cabs to have their meters adjusted.

Ms Tan said this was mainly to update the meters for next year's public holiday slots. There is a $1 surcharge for public holidays.

But The Straits Times understands the tweaks - taking around 20 minutes per cab - also include adding a chip to allow the metered fare structure to be adjusted wirelessly.

Taxi drivers have been calling for a fare hike for several weeks now, citing the higher cost of fuel and the two percentage point rise in the goods and services tax, which has raised their rental rate by an average of $50 a month.

Diesel at the pumps, after a discount, has risen by around 20 per cent since the last cab fare increase in July last year, raising fuel cost per cab by around $300 each month.

Member of Parliament Seng Han Thong, an adviser to the taxi operators' associations, said taxi fares should be pegged to the cost cabbies bear. He told The Straits Times two weeks ago that the taxi operators' associations have been lobbying for a fare rise.

'Although taxi drivers are always worried about losing business if fares go up too high...they still hope there would be a fare increase,' Mr Seng said.

Some quarters have called for fares to rise substantially to manage demand, so that commuters who need a cab will find it easier to get one.

Cabby Chew Lian Sheng, 37, said that is the 'only way to manage demand', since taxi companies are unable to put more taxis on the road because there are not enough drivers around.

Mr Chew said the flag-down fare should be between $7 and $10. 'There'd be a public outcry. But cabbies can earn a living with fewer trips.'

Mr Chew is also of the view that surcharges must be removed or at least, simplified, as they 'create an artificial market'.

Cabby Manjeet Singh, 62, said the flag-down fare should be $6 or $7. 'It's pathetic now,' he said. 'We should also abolish the surcharges - they are very confusing.'

Transport researcher and National University of Singapore lecturer Lee Der-Horng said simply raising fares would not solve all taxi woes. He said a 'package solution' was needed.

This includes having Electronic Road Pricing subsidies to encourage cabbies to go into the Central Business District; more designated taxi stands in the city centre; and simplifying surcharges.

Associate Professor Lee also suggested having 'a centralised call booking system...This way, passengers will just need to dial one number to get access to the pool of taxis from all taxi companies',

He said doing away with all surcharges may not be the answer. For instance, how can cabbies be encouraged to ply the 'graveyard shift' otherwise?

Nevertheless, he reckons the imbalance between demand and supply 'cannot be fully resolved'.

Will the rapidly increasing cost of living in Peasant land ever slow down and come to stop? The possibility of that happening does not look too hopeful.

When Comfort introduce their new range of cabs like the Hyundai Sonata and Kias Magentis and starts charging people more just because it is supposedly more luxurious, do we have a choice in rejecting it and saying, “hey this is not what we need, why do you buy things and then charge us more when we could have more of the old and enjoy a lower fare”? The situation is the same as the investment made in TVs being put in place everywhere by the public transport companies and their so called “value-adding” by giving us more commercials to watch while they reap the benefits of the advertising dollar.

Instead of lobbying for an increase in cab fares, shouldn’t people be lobbying against the cost of diesel which in the first place is the root of their problems?

The increase in oil prices in recent times have been link to the increasing oil prices which reach a peak of USD 99 but now it is currently trading around the USD 88 – 90 region. The response to raise oil prices is always swift but the response to lower it is ever so lagging and may not even happen at all. As a local oil company who has the power to influence the price level of petrol, SPC could have taken a lead to cut their prices thus forcing other oil companies to do likewise but no, that won’t happen as SPC is a public listed company and they have to take care of their “shareholder’s interest”.

Calculating from the $50 increase in rental rates due to the 2% increase in GST, the cost of renting a cab is $2,675 a month, translating to approximately $90 a day for renting a cab in a month of 30 days. If Comfort wants to help their drivers, lowering their rental charges would go a long way in helping them. As Comfort is a public listed company, I also wouldn’t expect them to do so as they have to take care of their “shareholder’s interest”.