Cab operators should lower rental rates for efficient deployment of fleet

It is interesting to note how quickly taxi operators have jumped on the bandwagon to levy higher fares but have been slow to change the pricing structure of taxi rental rates (ComfortDelGro is third taxi firm with plans to introduce surge pricing; ST Online March 3.)

There have been reports about a substantial number of unhired cabs sitting idle (Rental cars, unhired taxis sitting idle; ST Online ; Jan 15). This is happening because of high rental rates.

The cab operators would rather keep the taxis in cold storage than lower their rental rates.

A lower rental rate will attract more to drive their cabs.

It is ironic that while taxis are sitting idle in the yards leading to fewer cabs on the roads, the taxi operators want to change their pricing to manage demand.  Each cab that is not rented out represents a Certificate of Entitlement (COE) that has been allocated but not utilised. When taxi companies hoard unused cabs, this translates to higher COE premiums that hurt private car owners. 

Perhaps a penalty could be imposed on idle cabs in excess of a certain percentage of the fleet.

This will compeltaxi operators to lower rentals to achieve a healthy rate of deployment or to deregister the taxis and release the excess COEs into the pool.

Felix Kim Heok Eng

A version of this article appeared in the print edition of The Straits Times on March 10, 2017, with the headline 'Cab operators should lower rental rates for efficient deployment of fleet'. Print Edition | Subscribe