Provisional Legislative Council
Panel on Transport
Urban Taxi Fare Increase Applications
INTRODUCTION
The Transport Advisory Committee (TAC) has recommended an average 5.9% increase in urban taxis fares with effect from June 1998.
BACKGROUND
2. Taxis provide a personal, door-to-door service and are regarded as an alternative to private cars. As taxis are uneconomic road users, it is Government policy to regulate passenger demand through an effective pricing mechanism and maintain a meaningful fare differential between taxis and other modes of public transport.
FARE POLICY
3. Taxi fare increase applications are considered in accordance with the following guiding principles -
- the need to ensure the financial viability of taxi operations, taking into consideration changes in revenue and operating costs;
- the need to maintain an acceptable level of taxi service in terms of taxi availability, passenger waiting time and feedback from passengers;
- the need to maintain a reasonable differential between taxi fares and those of other public transport modes; and
- the likely public acceptability of the proposed fares.
In late 1997, three groups of urban taxi associations submitted applications for a fare increase to take effect after the Chinese New Year.
4. Urban taxi fares were last increased by 6.3% on 13 April 1997. The projected accumulated inflation between April 1997 (the date of last fare increase) and June 1998 (the proposed implementation date of new fares) is 6.0%.
FARE OPTIONS
5. Having regard to the guiding principles outlined in paragraph 3 above, the following five fare options have been examined -
|
Option
(Note)
|
Flagfall
for First
2 km ($)
|
Each Subsequent 0.2 km ($)
|
Waiting Time per Minute ($)
|
Rate of Increase/
(Decrease)
|
Rate of Front Loading
|
Fare Differential
(Jan-June 97)
|
|---|
|
Current fares
|
14.50
|
1.30
|
1.30
|
-
|
11.5%
|
5.3 |
|
A
|
20.00
(first 3 km)
|
1.30
|
1.30
|
(2.9%)
|
2.6%
|
5.1 |
|
B
|
14.50
|
1.40
|
1.40
|
4.4%
|
3.6%
|
5.5 |
|
C
|
15.00
|
1.40
|
1.40
|
5.9%
|
7.1%
|
5.6 |
|
D
|
15.50
|
1.40
|
1.40
|
7.4%
|
10.7%
|
5.7 |
|
E
|
16.00
|
1.40
|
1.40
|
8.8%
|
14.3%
|
5.8 |
Note : Options A, D and E represent the three applications submitted by urban taxi associations.
6. Options A and B could not restore the financial position of urban taxi operators and hence would not be acceptable to the trade. Options D and E could restore the income of some taxi operators to a level close to their previous income, but the proposed increases might not be acceptable to the travelling public.
7. Option C seems to be more balanced. The rate of increase is in line with inflation and should be acceptable to taxi passengers. A reasonable fare differential between taxis and other public transport modes will be maintained. This option will improve the financial position of rentee-drivers and restore the income of owner-drivers and rentor-owners to a level closer to their past income.
8. The projected monthly net income of the three groups of taxi operators after a 5.9% fare increase (Option C) is shown below -
Monthly Net Income of Urban Taxi Operators
(in June 1998 prices)
|
Monthly Net Income
|
Rentee-
Drivers
|
Owner-
Drivers
|
Rentor-
Owners
|
|---|
|
Average income for the past 3 years
|
$13,453
|
$20,887
|
$8,427 |
|
Projected June 1998 income
(assuming no fare increase)
|
$12,862
|
$16,279
|
$6,241 |
|
Projected June 1998 net income
(after a 5.9% fare increase)*
|
$13,571
|
$17,649
|
$7,121 |
* It is assumed that taxi rentals will increase in line with the rate of fare increase. A 10% increase in fares will result in a 2% decline in patronage as a short-term effect of passenger resistance.
SUMMARY OF RECOMMENDATION
9. It is recommended that the current fare scale for urban taxis be revised with effect from June 1998 as follows -
|
Existing
Fares
|
Recommended
Fares |
|
Flagfall for the first 2 km
| $14.50
|
$15.00 |
|
|
|
|
Fare for every subsequent 0.2 km
|
$1.30
|
$1.40 |
|
|
|
|
Waiting time charge for every 1 minute
|
$1.30
|
$1.40 |
|
|
|
|
Telephone booking surcharge
|
$5.00
|
$5.00
(no change) |
|
|
|
|
Surcharge for every article of baggage, animal or bird
|
$5.00
|
$5.00
(no change) |
Transport Bureau
Government Secretariat
2 January 1998
