Too little taxi fare distinction ‘can kill efficiency’
TODAY file photo
SINGAPORE — Much as commuters wish for a system where they can flag a taxi without having to work out what different taxi companies charge, experts and parliamentarians pointed out the challenges of arriving at a level of standardisation that does not disadvantage either taxi drivers or commuters.
Too little differentiation between companies can kill market efficiency if players see little incentive to serve commuters during certain hours or in certain locations, for instance.
Yesterday, the authorities proposed a taxi fare structure that stopped short of standardising flag-down fares across companies, but introduced parameters such as uniform timings for peak periods and percentage rates for time-based surcharges. Companies can also still set their own unit fares, albeit based on conditions set by the authorities.
“I think we have the most complicated fare structure in the world. It’s high time the fare structures are simplified for the convenience of commuters. Commuters have (given) feedback that they find it difficult to understand the fare structure,” said Consumers Association of Singapore (CASE) executive director Seah Seng Choon.
Mountbatten Member of Parliament Lim Biow Chuan, who sits on the Government Parliamentary Committee (GPC) for transport, said there is more room for standardisation. “I can accept a fare distinction between a premium taxi and a standard taxi because you have more comfort. (But between standard taxis), my personal take is that we should have a more standardised fare across (companies),” he said.
Nanyang Technological University (NTU) economist Walter Theseira said the authorities have standardised areas that are already fairly harmonised. For example, all taxi companies charge the same unit fares for standard taxis, because they want to make minimal changes to the current market.
“Whenever you try to regulate, you are going to have unpredictable effects, and the last thing you want to do is introduce regulation that makes the market less efficient,” he said.
Member of Parliament Cedric Foo (Pioneer), who is chairman of the transport GPC, said if the authorities were to mandate the removal of area surcharges, for example, commuter objectives of taxi availability might go unmet. “Some kind of surcharges must be allowed, because otherwise you will have insufficient taxis, say in the airport or CBD and so forth,” said Mr Foo.
Dr Theseira said there should be some standardisation to flag-down fares, but felt the authorities are taking a wait-and-see approach and hinting that the taxi firms should do more to standardise it among themselves.
DBS Group Research transport analyst Andy Sim said the structure lets taxi firms adjust fares based on their cost needs. “Prices are based on the cost of the taxi, so they need to adjust the price regularly to pass the cost on to consumers. If you regulate too tightly and only at certain intervals, you can pass on the costs, then when you pass, you will see a very big jump,” he said.
Beyond standardisation of fares, more needs to be done to make taxi fares transparent so commuters can make informed choices, observers said. Mr Foo suggested taxis display details of charges more clearly, with colour-coding to make it easy for commuters to differentiate between companies, while Mr Seah suggested displaying flag-down fares at taxi stands.
“If you’re talking about fare competition, then you must always put the information in the hands of the consumer so they can make informed choices. But it’s difficult now because they don’t know what the rate is like,” said Mr Seah. Laura Philomin with ADDITIONAL REPORTING BY XUE JIANYUE
