8/14/2006

taxis - high operating cost and poor service

Night life in Hong Kong is so very alive. One reason may be that there is no midnight surcharge. Hong Kongers, tourists and business visitors know that they can have a taxi ride home at an affordable rate, however late in the evening or early morning. I also question the $100 daily taxi rental fee imposed, seeing that car rentals to the public range from $40 to $50 a day. And with second-hand car dealers coming into the business, there is talk of even $30 a day. Perhaps the over-size call-booking machinery can be made smaller to cut this $100 rental fee. I suggest that taxi drivers be given the leeway to be their own bosses in their trade with a condition that their vehicles are taken for roadworthiness tests at regular intervals. Perhaps service will improve with this flexibility. Yik Ching Fong (Ms) The above extract is from Straits Times Interactive. It is very obvious why the cost of taxis is so expensive while the taxi drivers are not getting the income they deserved, thus affecting the quality of service. All the booking fees and surcharges should be removed. Better still, taxi drivers should be allowed to rent their taxis from whoever and not be held ransom by taxi companies. When one can get a car for $30-$50 a day, why should taxi drivers be compelled to rent from taxi companies at $100 a day? Allow more competition in the industry, allow private operators to enter the business and provide cheaper taxis and remove all the ridiculous cost. Taxi drivers will benefit from lower cost, more passengers and higher net take home income. Taxi companies that are uncompetitive shall be allowed to wind up. All these monopolies are bad.

5 comments:

Anonymous said...

Currently, on top of the rent taxi driver need to pay, the drivers need to pay for season parking. this added to their cost. Why can't the taxi's company just rent the taxi for a shorter period said 8hrs. Anybody have a taxi licence can just walk-in and rent a taxi for business. is our taxi company so lazy and wanted to make easy money? the authority should comein to offer this service if not don't said no solution, they are similarly and equally lazy. talk only no action.

redbean said...

The cost of COE has came down. The cost of buying a car has come down significantly. So the cost of a taxi should have proportionately be down as well. The $100 a day rental for a taxi must have been computed during the crazy days when COEs were shooting to the sky. Since then, has there been any adjustment downwards?

All we heard of are the raising of this charge and that fees to cover the rising operating cost of a taxi. The cost of diesel and petrol are understandable. But these are variable cost and are absorbed by the taxi drivers.

As for the taxi owners, with the lowering of cost of a taxi, the rental will only mean more profit. Why can't this savings be passed down to the taxi drivers and commuters?

At $100 daily, the rental collection for a year is $36,500. Thus in less than two years, the whole cost of a taxi will be fully recovered. If the taxi's operating life is 10 or 6 years, there are 8 or 4 years of income less cost, of $292,000 or $146,000 per taxi. Minusing other overheads, it is still generating quite good profit.

When will the taxi operators start to pass down the savings in the cost of buying a taxi to the taxi drivers and commuters?

Anonymous said...

Allow more competition ? Dream on, redbean. You said it yourself that the current operators make good money doing what they do now. Since the current major operators are government linked in some way, why in the world would the govt want to introduce competition that will erode these operators' profit margins ?

redbean said...

don't worry lah. all distorted and contrived truth or situation cannot last long.

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