Cab firms hit by higher operating licence fees

The increase in operating licence fees is said to have to do with higher costs associated with monitoring taxi service standards.
The increase in operating licence fees is said to have to do with higher costs associated with monitoring taxi service standards.PHOTO: ST FILE

Taxi association says operators may pass the cost on to drivers by raising rental fees

The embattled taxi industry, which has been reeling from disruptors such as Uber and Grab, has taken another blow - sharply higher government fees.

The Land Transport Authority (LTA) has told operators that their operating licence fee will rise from 0.1 per cent of gross revenue to 0.2 per cent this year, and then to 0.3 per cent next year.

This is the first such increase in more than 10 years. For a mid-sized operator such as SMRT, the fee hike translates to more than $100,000 in additional costs per year.

Based on its taxi revenue for the past two financial years, its fee would go up from an estimated $140,000 to $420,000 next year, assuming revenue remains constant.

Operators contacted were furious but resigned. "What can we do?" the manager of a small firm said. "It's not as if the rate is negotiable."

Another said: "That's a doubling and trebling of fees in just two years. We're going to appeal. It may be useless but we have to register our protest."

The LTA was not available for comment but The Straits Times understands that the fee hike has to do with higher costs associated with monitoring taxi service standards.

Currently, private-hire operators such as Uber and Grab do not pay this fee. Their service standards are also not monitored by the LTA.

National Taxi Association executive adviser Ang Hin Kee said operators may pass the cost on to drivers by raising rental fees. "Higher cost may trickle downwards," he said.

For cabby S.C. Wong, it is already starting to trickle down. Mr Wong, 64, said ComfortDelGro has been trying to persuade him to swop his Hyundai Sonata for a costlier Hyundai i40 cab.

"I refused because it costs 30 per cent more. The market is very bad now," he said. "My takings have fallen by 20 per cent to 30 per cent from last year, when Uber and Grab started full swing. My call bookings have dropped too."

Mr Wong, who has been driving a taxi for 15 years, said the i40's higher flag-down fare of $3.70 - 50 cents higher than the Sonata's $3.20 - "cannot cover the $30 increase in rental".

"If I get 20 passengers a day, that's only $10 more," he said.

Asked what he will do when his Sonata is deregistered in March, he sighed. "I don't know. Maybe by then, I would have stopped driving."

ComfortDelGro said the higher rental reflects the higher purchase price of the i40.

A spokesman said the i40 - which is slightly smaller than the Sonata - costs more because it complies with Euro 5 emission standards.

The i40's rental is $130 a day, while the Sonata's is as low as $100. The $30 hike means ComfortDelGro rakes in nearly $88,000 more in rental per cab over its eight-year lifespan. The group has about 17,000 taxis.

But even as it is piling higher rentals on drivers, Singapore's biggest cab operator is trying to woo cabbies who have quit with a two-month 50 per cent rental discount.

"The scheme is a promotion to attract drivers who have left and wish to rejoin the company," the spokesman said. "This is part of our ongoing efforts to recruit drivers."

Industry players said the percentage of unhired cabs has risen - from single digits before 2013 to more than 10 per cent now for some operators.

For commuters, the days of $3.20 flag-downs are numbered. Sonata taxis will all be replaced by i40s in the next couple of years.

A version of this article appeared in the print edition of The Straits Times on June 24, 2016, with the headline 'Cab firms hit by higher operating licence fees'. Print Edition | Subscribe