Driving cabbies to pick up fares, not surcharges

It has been a year since Senior Minister of State for Transport Josephine Teo told Parliament that the Government would look into simplifying Singapore's bewildering taxi fare structure.

There are close to 10 different flagdown rates, three different metered-fare structures, more than 10 kinds of surcharges as well as eight types of phone- booking charges.

And that is not counting the growing number of taxi apps that have appeared since Mrs Teo described our cab fares as "complex and confusing".

So far, nothing has been announced officially, even if the industry expects some changes.

The Straits Times yesterday reported that changes to cab fares are pending, with industry players expecting higher flagdown rates, bigger interval jumps but pared-down surcharges.

Why is it taking so long to change the fare structure?

Well, for starters, the Government deregulated taxi fares in 1998 - the very move that triggered the fragmented rates commuters are grappling with now.

So, for regulators to tell the industry to shift to a simpler structure is not going to be easy.

The Land Transport Authority (LTA), which has been tasked to work with the Public Transport Council to come up with a solution, can only persuade and cajole the industry to change.

The task may have been slightly less daunting if there were one or two operators - instead of the six that commuters have to contend with since the industry was liberalised in 2003.

One solution to this dilemma is to re-regulate the industry. But that would be untenable on two counts. One, no government likes making U-turns on policies it instituted. Doing so may show a lack of decisiveness and may spook investors.

Two, reverting to the previous regulated regime would mean subjecting the transport authorities to even more scrutiny by commuters and the public - something the administration clearly does not relish.

If those are indeed the reasons for the delay in making changes, then they are misplaced. Because to many commuters, taxis are a form of public transport, and they expect public transport to be well regulated, never mind that cab fares have been "deregulated" since 1998.

A mishmash of fares could also give the 15 million tourists who come to Singapore annually a less-than-sterling impression of the country.

The difference in fares between taxi types can be $10 for a ride over the same distance. Such differences may remind visitors of taxi rides in dodgier cities, where fares are often discretionary.

Taxi operators argue that the purchase price of cabs vary according to type and to prevailing Certificate of Entitlement (COE) premiums. And hence they command different rentals, which lead to different fares.

On the surface, that makes sense. But look deeper and it does not hold water.

Operating assets of any business vary in price over time, but for reasons of clarity and competition, goods and services providers do not adjust prices according to every minute fluctuation in cost. (Otherwise, fares should be adjusted every two weeks, at the close of every COE tender.)

Also, prices go up and they go down. So do COE premiums. But taxi operators are ever ready to adjust rental rates upwards; adjustments downwards rarely happen, if at all.

Operators are also quick to justify raising rental charges for cabs. They might buy cabs from a European brand, call it a premium vehicle, and charge a premium rental.

But unbeknown to the general public (and perhaps the regulators), the cabs are made in an Asian country, with major parts from a second-tier Asian automaker. Also, they may not have features like airbags and anti- lock braking systems, which are mandatory in Europe. (On that front, regulatory powers should come into play. Safety standards should be enforced, just as emissions and service standards are.)

To be sure, Singapore is not alone when it comes to confusing taxi fares. Fares are confusing in cities such as Paris and London. But other cities have clearer, flatter rates, and they tend to be places where the taxi industry is well-regulated. The best examples include Hong Kong, New York City and Frankfurt.

In Hong Kong, for example, the ubiquitous red urban taxi has an uncomplicated fare structure with few (and cheap) surcharges.

Two other types of taxis serve the New Territories and Lantau island, and their fare structures are similarly flat. Call booking is HK$5 (S$0.80) across the board. Yet, taxi availability is high.

Singapore should unclutter its taxi fares - for the sake of clarity for commuters, and also to improve taxi availability.

Today, cabby behaviour is skewed towards getting as much surcharge as possible. It is human nature. And it is to the detriment of overall cab availability.

A flatter structure with fewer surcharges would be the way to go. The primary fares (flagdown and interval jumps) can be moved higher to arrive at a uniform level.

The question is, how much higher?

That is something the LTA can compute fairly easily, as it has access to a wealth of data on how many kilometres drivers clock, how much they collect, and how much of the collection is in the form of surcharges.

The goal is to partly compensate the driver for the loss of income from the removal of surcharges. But not completely.

The idea is to have a fare system that motivates drivers to go where commuters are, not where surcharges are.