THE taxi industry has received much flak in recent months, from the usual grouses about cab unavailability and long queues at certain times of the day to the phenomenon of fare cheating and touts at popular nightspots.
The Land Transport Authority (LTA) has responded by stepping up enforcement efforts to curb roadside touting. It has also banned roadside flagging of taxis within the Central Business District (CBD) in an attempt to channel taxis to the existing taxi stands in the area.
Just this week, Member of Parliament Seng Han Thong, an adviser to the Taxi Operators' Association, proposed an additional location surcharge aimed at boosting taxi supply at various crowded places within the city.
But while these measures are commendable, they do not address the big-picture issues affecting the taxi industry in Singapore.
Instead of just asking where the problem areas are, it is better to ask why there are problems in the first place. Why are there so few cabs when you need one? Why do some drivers refuse to pick up passengers at certain times and places? Why do touts exist? And finally, why are there so many grouses and complaints?
These seemingly simple and straightforward questions have far-reaching implications. Let us tackle them one by one.
Supply and demand
THERE is certainly no shortage of taxis. With more than 23,000 taxis on the road (and increasing), we have one of the highest taxi per capita ratios in the world. What we are experiencing is a demand-supply mismatch in which the demand for taxis during certain times of the day (especially during weekday mornings and evenings) far outstrips the available supply.
This is made worse by the fact that most of this peak demand is uni-directional (either suburbs to city, or city to suburbs) and confined to certain areas (CBD, shopping belts etc). Taxi drivers will tell you they spend a large portion of their working day cruising without passengers. Simply increasing the number of taxis will do little to solve the problem. We must focus instead on more efficient allocation of resources.
Convoluted fare system
NEXT, we need to ask why cabbies have become the 'kings of the road' and are choosy about passengers. Ironically, this is largely a direct result of the complex fare system imposed to solve taxi shortage problems. Location and time-based surcharges may increase taxi supply at certain places at certain times of the day, but they have little effect on the overall problem and may instead aggravate it.
Simple economic reasoning bears this out. Let us assume a situation of perfect competition on the roads. The market mechanism will channel supply to where the demand is and some form of equilibrium will be reached. However, when surcharges are introduced, they distort this equilibrium. Taxi drivers respond by choosing where and when to pick up passengers in order to maximise their earnings.
With this in mind, let us re-focus on the real situation.
It is easy to see that there is an adequate supply of taxis during the 'peak hour' periods because of the stipulated peak-hour fares - from 7am to 9.30am and from 5pm to 8pm on certain days of the week. There may still be long queues at certain places, but the taxis do trickle in. But once this 'golden period' is over, the taxi supply dries up.
The situation is worse at night, from about 9pm to midnight. This also happens to be a period of high demand: people get off work, finish their dinners or shopping, and shops start closing. At midnight, of course, taxis reappear from hiding, summoned by the 50 per cent midnight surcharge.
Location surcharges are another bugbear. Such surcharges now apply at Changi Airport, Seletar Airport, Singapore Expo and the CBD. At the first three places, we see long queues of taxis that are at times idle for hours before they pick up a fare. You could see this as proof that the surcharge works. But then, couldn't these empty taxis be better deployed to other areas of the city where demand is higher and the waiting time much shorter for the cabbies?
The airport and Expo surcharges also result in cabbies preferring east-bound passengers to others at certain times of the day, so that they can then go to these specific places to pick up the next lucrative fare.
In similar fashion, the CBD surcharge was designed to attract taxis into the city in the evenings. Mr Seng has suggested that this surcharge be applied to more locations. But how will the authorities decide on these places? And won't it mean that taxis will then avoid those other places or taxi stands that do not merit the surcharge - or worse still, avoid picking up passengers in the outer parts of the city altogether?
Taxi drivers will seek to maximise their revenue, even if it means having to make detours or become selective about their passengers.
Passengers are not oblivious to surcharges either. There are those who will wait out the peak hours if they can to avoid the $2 surcharge. But that just adds to the problem after the peak hour surcharges expire. Simply put, surcharges create artificial demand and distort the market.
Cheats and touts
THE LTA's move to step up enforcement and penalties is a good thing. However, once again, we should ask the right question: Why do cabbies cheat and tout to begin with?
Many people do not empathise with the plight of taxi drivers. In most cases, the taxi is the property of the taxi company, with the driver renting it. He has to pay the stipulated rental regardless of his daily takings. Such an arrangement diminishes the companies' responsiveness to passenger feedback as there is no monetary incentive to do so.
Taxi drivers also point out that rental rates have not followed market trends. Most have remained stagnant or have even increased, despite the significant reduction in car prices recently.
Some smaller taxi companies have experimented with flexible rental schemes and lower charges to attract drivers, but others are reluctant to do so.
Most taxi drivers say they ply this trade because they have no choice. As drivers, they are simply 'hirers' and not employees. Unlike most other workers, taxi drivers are not entitled to employer CPF contributions. Whatever they accumulate in their CPF consists of their own voluntary contributions. Many work seven-day weeks and more than 12-hour days, especially if they do not have a relief driver.
They are not entitled to sick or holiday leave and they must still pay daily rental charges to the company even if they do not work on a particular day. And should they meet with an accident, not only do they have to pay damages if the fault lies with them but they also end up losing their trade for the period that the taxi is in the workshop.
Taxi drivers also face health and safety hazards as well as associated risks from being on the roads for prolonged periods of time.
Finally, because they are hirers, taxi drivers have to abide by the fare schemes set by their companies. While this is a good thing for consumers in terms of fare accountability and transparency, it also means that unless the taxi companies set realistic fare prices, their drivers will be unable to respond to higher operating costs. Unlike airlines, taxi drivers cannot impose a 'fuel surcharge' when diesel prices increase.
Of course, such circumstances do not mean that cheating and touting should be tolerated. But neither should the welfare of the drivers be neglected. Good service can only come from happy drivers.
Managing public expectations
SINGAPORE is probably one of the few places in the world where taxis are seen as a common form of public transport.
In the LTA's 1996 White Paper for a world-class land transport system, taxis are described as an important part of urban transport, filling the gap between mass public transport and private vehicles. Yet, at the same time, taxis are not accorded the privileges of public transport - they are subject to ERP, COE, ARF and other costs associated with private vehicles.
The general public also regards taxis as public transport. But a taxi driver's role is more like that of a private chauffeur. He offers point-to- point service, with no defined stops. In quite a few countries, taxis are generally not deemed to be public transport. Instead, they cater to only a select (or desperate) group of people.
The typical Singaporean 'cheap-and-good' mentality needs to be redefined. Many letters of complaint to the media use unfair comparisons. People often cite the case of London or New York, where the availability of the famous London Cabs or Yellow Cabs is never an issue. But the letters often fail to mention the hefty fares these cabs charge.
Another favourite comparison is with Bangkok, where there are many inexpensive taxis available. But once again, the critics seldom think of the different standards of living and the massive traffic congestion in Bangkok.
So let's stop all these comparisons and take a close look in the mirror instead.
Who takes taxis in Singapore? Almost everyone, I would reckon, from businessmen to students, housewives to lawyers, tourists to foreign workers.
Why do they take taxis? For some, convenience and time saving are a priority. But for others, especially small groups sharing a cab, taxis are actually cheaper or cost the same if they were to add up individual fares for other forms of transport.
Singapore's case is unique in the sense that most taxi passengers here want the comfort of a private vehicle but cannot afford to buy one, owing to various taxes and policies restricting the supply of such vehicles. This makes them begrudging users of the service - hence the perception of taxis as a form of public transport - with an unrealistic expectation of reliability and efficiency at a low cost.
A friend once told me that if the rail and bus systems in Singapore were more extensive, more people would use them and we wouldn't have the taxi problem we face today - a simplistic argument no doubt, but a pertinent one.
We should look at the big- picture issues. There is a limit to the number of taxis that can be put on the roads, given tight space and resource constraints and the Government's plan to eventually increase the island's population to six million. There is also a limit to the number of roads we can build. In the long run, sizeable and significant developments in mass transport infrastructure will be necessary to move more people to more places at a faster speed.
Singapore has always had a policy of 'infrastructure overprovision'. Infrastructure is built way ahead of ac-
tual demand (think Changi Airport) to prevent undercapacity and overcrowding. This has been one of the cornerstones of Singapore's economic success. I see little reason why it cannot be applied to mass urban transport, especially in rail infrastructure. However, until that day comes, we will have to be content with what is available.
Swallowing the bitter pill
THERE is little consensus on how the taxi situation can be improved. In an earlier commentary (The Straits Times, July 4, 2007) I argued for a higher flag-down fare and the abolition of all surcharges.
However, because of the deregulated nature of the industry, fares are not set by the LTA, but by the individual taxi companies, with subsequent approval from the authorities. Thus, the onus is on the taxi companies to make the first move.
Theoretically, the economic mechanism of open competition should be a self-adjusting one catering to changes in demand and supply. But not all is fair in the taxi arena, where there is one dominant player, the Comfort DelGro group.
Unless the dominant player adjusts its fares first, it is unlikely that the smaller companies will make any changes to theirs for fear of a consumer boycott (if fares are increased) and driver discontent (should fares be reduced). The onus should then fall back on the state agency to ensure that consumer welfare is not compromised.
The best solution would be to raise basic fares sharply and allow the market to readjust. Since the LTA does not want to flex its regulatory muscles in the pricing of ser-
vices, the only other way is for taxi companies to come together to work out a new fare basis that is equitable and practical for all.
I envision a fare structure at double the prevailing levels for there to be any real impact. Of course, this is easier said than done, for there is bound to be strong opposition from the taxi companies and the general public. The higher fares will dampen demand (which is artificially high for a taxi service) and, as a result, a big number of cabbies may choose to return their taxis and seek greener pastures. Thus, taxi companies may be fearful of losing hirers.
There is bound to be a public outcry at any drastic increase in fares but, if taxis are viewed as a premium chauffeur service rather than as a form of mass transport, higher fares would be justified in weeding out marginal users and ensuring that taxis are always available for those who really need one.
The call booking system can then become part of the expected service provided by the taxi companies - at no extra charge.
This proposal is drastic and controversial. But sometimes radical measures are needed in order to move forward. For this proposal to work, a multi-stakeholder approach is essential. There needs to be cooperation among taxi companies to increase fares and lower rental charges for drivers, continued regulatory enforcement of errant acts by the LTA and, most importantly, a renewed understanding of the taxi service on the part of the general public.
This may a bitter pill, but a necessary one to help us cure this disease, which has been plaguing an otherwise efficient city.
The writer is a researcher in the Department of Geography at the National University of Singapore. The opinions expressed here do not represent those of the university.
ON A NEEDS BASIS
I envision a fare structure at double the prevailing levels for there to be any real impact...if taxis are viewed as a premium chauffeur service, rather than as a form of mass transport, higher fares would be justified in weeding out marginal users and ensuring that taxis are always available for those who really need one.
