Provisional Legislative Council
Panel On Transport
Lantau Taxi Fare Increase Application
INTRODUCTION
The Transport Advisory Committee (TAC) has recommended an average increase of 9.1% in fares for Lantau taxis with effect from March 1998.
BACKGROUND
2.There are 50 Lantau taxis and about 80 operators. They serve about 2 500 passengers a day. Lantau taxi fares were last increased by 10% on 19 July 1996. In late 1996, the Lantau Taxi Association submitted an application for a fare increase of 10.6% to take effect in early 1997. In the light of the financial and operational information available in early 1997, the Administration did not support an increase in fares for Lantau taxis at that time.
3.A recent review of the financial position of the trade has, however, indicated the need for an increase in fares for Lantau taxis in the first quarter of 1998. The projected accumulated inflation between July 1996 (the date of the last fare increase) and March 1998 (the implementation date of the proposed fare revision) is 9.4%.
FARE POLICY
4.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.
FARE OPTIONS
5.Having regard to the guiding principles outlined above, TAC has examined the following five fare options in detail -
| Option |
Flagfall
for first
2 km ($) |
Each
subsequent
0.2 km ($)
|
Waiting
time per
minute ($) |
Percentage
Increase
|
| Existing fares |
11.00 |
1.10
|
1.10 |
-
|
| A |
12.80 |
1.10 |
1.10
|
3.5%
|
| B |
11.00 |
1.20 |
1.20
|
7.2%
|
| C |
11.80 |
1.20 |
1.20
|
8.7%
|
|
D | 12.00 | 1.20 | 1.20
| 9.1%
|
| E* | 12.80 | 1.20 | 1.20
| 10.6%
|
* Option E represents the fares proposed by the Lantau Taxi Association.
6.Options A to C, which represent fare increases of between 3.5% and 8.7%, would not bring the overall financial position of the Lantau taxi operators to a level close to their previous income in real terms. The rate of increase would also be considered too low to support a financially healthy taxi operation on Lantau Island. Option E would improve significantly the financial position of the trade, but the proposed new fares are unlikely to be acceptable to the public.
7.On balance, Option D seems to be able to balance the interests of taxi operators and those of the travelling public. This option will improve the financial position of Lantau taxi operators to a level comparable to their previous income in real term. The rate of increase is in line with the projected inflation rate and is unlikely to meet with strong objections.
8.The projected monthly net income of the three groups of taxi operators after a 9.1% fare increase (Option D) is shown below -
Monthly Net Income of Lantau Taxi Operators
(in March 1998 prices)
| Monthly Net Income |
Rentor-
Owners |
Rentee-
Drivers
|
Owner-Drivers
|
| Average income for past 3 years
|
$2,969
|
$12,334
|
$13,374
|
| Projected March 1998 income (assuming no fare increase)
Projected March 1998 net income(after a 9.1% fare increase)
|
$2,381
|
$10,004
|
$12,391
|
| -with passenger resistance*
|
$2,783
|
$11,320
|
$14,043
|
| -without passenger resistance
|
$2,783
|
$11,795
|
$14,540
|
*Passenger resistance is assumed to be 2% for every 10% fare increase as a short term effect.
SERVICE SURCHARGES
9.The baggage surcharge was revised from $4.00 to $5.00 in July 1996 and the telephone booking surcharge has remained at $5.00 since February 1994. The Lantau Taxi Association has applied for an increase in both surcharges by $1.00, i.e. from $5.00 to $6.00.
10.It is recommended that both surcharges for Lantau taxis should remain unchanged at $5.00, the same as those for urban taxis. Surcharges account for less than 1% of a Lantau taxi driver's income.
SUMMARY OF RECOMMENDATION
11.It is recommended that the current fare scale for Lantau taxis be revised as follows -
|
Existing Fares |
Recommended Fares
|
| Flagfall for first 2 km
|
$11.00 |
$12.00
|
| Fare for every subsequent 0.2 km
|
$1.10 |
$1.20
|
| Waiting time charge for every 1 minute
|
$1.10 |
$1.20
|
| Telephone booking surcharge
|
$5.00 |
$5.00
(unchanged)
|
| Surcharge for every article of baggage, animal or bird
|
$5.00 |
$5.00
(unchanged)
|
12.It is proposed that the new fares should take effect in early March 1998.
Transport Bureau
Government Secretariat
6 December 1997
(TBCR 1/5581/87 (95) Pt. 6)
