[News] Address root cause to fix COE woes
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Linking taxi availability to COE availability may only complicate matters further
The Straits Times - August 2, 2012
By: Christopher TanIS THE Government mixing up two separate objectives in its latest move to remove taxi bids from Category A of certificates of entitlement (COEs) - long the staple of buyers of bread-and-butter cars?
Or is it trying to kill two birds with one stone?
In an announcement with few details last week, Transport Minister Lui Tuck Yew said that taxi companies will no longer have to compete with mainstream car buyers for COEs. Instead, their certificates will be drawn from the Open Category, currently the domain of big-car buyers.
As a concession, cab operators will not have to pay Open Category prices, but a three-month average of Category A prices. The latter are usually 10 per cent to 50 per cent lower than the former.
Exactly how many COEs will be drawn from the Open Category for taxis will hinge on how available the cabs are to commuters.
Despite having one of the highest number of cabs per 1,000 residents among developed cities, Singapore, it seems, remains one of the hardest places for someone to get a cab.
So the Government's decision to remove taxi bids from Category A, and tying how many COEs cab companies can have to a basic service standard, appears to be a double-barrelled strategy.
First, it aims to remove an upward pressure on Category A premiums by taking taxis out of this category. This will have a profound effect on the affordability of cars, as well as on Singapore's worrying inflation rate.
Category A accounts for more than half of all COEs that car buyers bid for.
Second, it is putting the onus of ensuring taxi availability on the cab companies. If they want more COEs to expand their fleets, they will have to meet this service standard somehow.
Seems like a neat cure-all solution. But is it?
Let's examine the issues at hand. Singapore has 5.2 cabs per 1,000 residents, compared with 3.3 in London, 2.6 in Hong Kong and 1.5 in New York.
Since the Government liberalised the taxi industry in 2003, the cab population has ballooned by nearly 40 per cent to more than 27,000 last year. Yet, commuters constantly gripe that hailing a cab is a chore.
Taxi ridership grew merely 16 per cent from 2003 to last year.
It is clear that cab companies currently have no direct incentive to improve taxi availability. Their primary objective is to collect rental from hirers (cabbies), with as big a fleet as they can muster.
So, pegging an operator's expansion to taxi availability is ingenious, no?
But this is what could well happen: Taxi companies will come out to support the Government's initiative, but their efforts to raise taxi availability will fizzle out.
Taxi availability (or the lack of it) is largely a function of the current business model and fare structure. Driving a cab is not a career choice for most people. For many drivers, it is often the last resort.
Another cohort is made up of drivers who are not "career cabbies". It is estimated that up to one-third of cabbies today are folks like retirees or small business owners, who will ply the streets just long enough to cover their daily rental, and use their cabs as their personal transport for the rest of the day.
Cabbies will naturally drive when the yield is highest. Thus they will drive when and where surcharges apply. They will also wait for call bookings.
As long as this status quo remains, it will be hard for taxi availability to improve.
In fact, taxi companies will, in all likelihood, rush to expand their fleets before the new rules kick in in 2014.
The authorities could of course mandate a minimum mileage a cabby has to clock a day. But this will have an environmental cost, with no guarantee that the extra mileage will be "occupied mileage". In other words, cabbies may be forced to cruise empty.
The second issue at hand is COE premium spikes. While the current Category A price spiral is fuelled by taxi bids, the underlying cause is a record supply shortage.
If the COE supply had not plunged to less than a third of what it was just four years ago, the influence of taxi bids would not have been so strong.
What accounts for the supply shortage has been well documented. The COE system suffers from a feast-and-famine supply phenomenon that the authorities have long ignored. Until now.
But instead of a bold overhaul of the 22-year-old system to improve equity, we are going to see yet another tweak. The latest one, to remove taxi bids from Category A, will remove further upward pressure on premiums, but it is unlikely to send premiums to saner levels.
This is because Category A COE supply for the current six-month period is nearly 40 per cent lower than that of the last six months.
So, even without bids from taxi companies - which account for around 25 per cent to 30 per cent of total bids - COEs in this segment will probably remain firm.
What car buyers and sellers have been clamouring for is a more stable and predictable supply pattern: one that does not see premiums at $5,000 in one year and $90,000 in another.
Mr Lui has said that he is likely to "save" some certificates during the next bonanza period from 2014 to 2018 for future years.
But how many? And how will the "saved" COEs be dispersed later?
Even before clarity dawns upon those issues, we now have yet another uncertainty: how the supply of Open Category COEs will be affected by taxi bids post-2014.
It is admirable that the Government admits things are not working as well as they should, and is looking to fix the system.
But linking taxi availability to COE availability may only complicate matters further.
As with all problems, it is better to go right to the root cause for a permanent fix. In both cases, the root causes are not unknown.
But, to reiterate, taxi driving has to be made more attractive as a career choice; cabbies need to be incentivised to pick up more fares as and when they appear, rather than face disincentives if they don't meet a quota.
Next, the vehicle quota system should contribute to a more sustainable vehicle population growth pattern, with as little social, economic and political cost as possible.
If it is unable to do that, a complete rethink is probably the thing to do.
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full article can be found on yesterday 2nd August ST .
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Wah, this guy really have ink! Lots!!
I think the main problem is the policy makers are always trying to solve problems without losing revenue streams.
eg, what's the objective of ERP? Congestion control, right?
Then why does an empty cab going into CBD need to pay erp???
Doesn't making easier access to cabs inside CBD incentivise car owners to leave their cars at home?
Furthermore, COE system was to manage vehicle population growth thru quota and bids. Now they want to control taxi quota.
So why do cab company need to pay coe (a cost that will utimately be passed down to TD) when they are not allowed to bid?
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Its a relief to see an un-bias article that argues logically,
after seeing so many bias articles from the evening chinese papers,
that sing praises for some of the Taxi companies.
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If you ask me, in terms of availability of cabs, there is an obvious mis-match between rewards and effort/overheads for TDs.
Hong Kong for eg has the mini-bus industry and taxis to supplement the public transport system.
The authorities here have to decide whether to treat our taxi as a supplement to the buses/mrt, a premium mode of transport or a combination of both.
Premium transport obviously requires premium fares and would make taxi only affordable to a certain income groups, people on business duty and tourist who have not much choice.
As a supplement to bus/mrt, the fares have to be kept affordable and therefore overheads of TDs must correspondingly be reduced, eg no COE or diesel tax and non payment of erp when empty.
Being land scarce, I think increasing number of cabs is not the solution. Enabling each cab to complete more trips, I feel, is.
Let cabs use the bus lanes. After all, besides the public buses, cabs have to be next most efficient road users.
Through legislation (for new buildings) and perks (for existing buildings), require/encourage dedicated access for taxi.
Hopefully, an improved experience for pax taking taxis would sway them from the idea of owning a car.
Discentives, through the fare structure, is another way to discourage hogging and inefficient use of cabs, which must be considered as a national resource.
Fare stages (1,2 or even 3) should be both time and distance based, eg 1st 10 km or 1st 7 mins. This should discourage some who like to choose scenic and slow routes for a small or perceived/non-existent saving.
To improve service, charges for open-trunk, waiting and multiple stops should be implemented. After all, hotels and restaurants are allowed to levy service charges. Even porters are rewarded with tips.
Thus, through the fare structure, treating taxis as a no-frills solution for point a to b transit should be encouraged.
When sg truly becomes a 24/7 city, a favourable fare structure and related gov measures could even result in a 3 shift taxi industry.
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I can still remember the way revised fare (35%) affected pax behaviour.
When morning peak period surcharge was $1 then $2, used to kena pax board my cab (like chop 1st u know) in the morning. Moved a few metres, "uncle, pls stop by the coffee shop. i wanna buy yu cha kway for breakfast".
Nowadays, where got such moves??
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But, to reiterate, taxi driving has to be made more attractive as a career choice; cabbies need to be incentivised to pick up more fares as and when they appear, rather than face disincentives if they don't meet a quota.
cabbies need to be incentivised to pick up more fares - strongly agree, but who is gonna to pay? from LTA?
face disincentives if they don't meet a quota. - don't like such to happen but chances are, it will happen.
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Ya open boot surcharge like last time. Then alot will chiong place like AMK Hub, Jurong Point and places with Sheng Siong/NTUC and hope for trolley pax and not see liao siam....Lol
Btw last time the open boot charge $1 is official one or the TD carrot us one?
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got open boot charge meh?
which yr are u born in?
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Originally posted by EP77:
got open boot charge meh?
which yr are u born in?
Got leh. I one year older then you only leh.....That time is I think primary school time. Every time go AP will kanna boot charge....Lol
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So Fri night hor seh bo? Drive until so late/early? Lol
I going to climb mountain this 2 days.....bye bye
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Originally posted by hammerhammer8888:
So Fri night hor seh bo? Drive until so late/early? Lol
I going to climb mountain this 2 days.....bye bye
earn peanuts..... sighz....
u having good life hor. Enjoy!
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Originally posted by EP77:
earn peanuts..... sighz....
u having good life hor. Enjoy!
Aiya Fri night with rain is like that one....have an early rest Sat then chiong...
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Originally posted by Poolman:
Linking taxi availability to COE availability may only complicate matters further
The Straits Times - August 2, 2012
By: Christopher TanIS THE Government mixing up two separate objectives in its latest move to remove taxi bids from Category A of certificates of entitlement (COEs) - long the staple of buyers of bread-and-butter cars?
Or is it trying to kill two birds with one stone?
In an announcement with few details last week, Transport Minister Lui Tuck Yew said that taxi companies will no longer have to compete with mainstream car buyers for COEs. Instead, their certificates will be drawn from the Open Category, currently the domain of big-car buyers.
As a concession, cab operators will not have to pay Open Category prices, but a three-month average of Category A prices. The latter are usually 10 per cent to 50 per cent lower than the former.
Exactly how many COEs will be drawn from the Open Category for taxis will hinge on how available the cabs are to commuters.
It is admirable that the Government admits things are not working as well as they should, and is looking to fix the system.
But linking taxi availability to COE availability may only complicate matters further.
As with all problems, it is better to go right to the root cause for a permanent fix. In both cases, the root causes are not unknown.
But, to reiterate, taxi driving has to be made more attractive as a career choice; cabbies need to be incentivised to pick up more fares as and when they appear, rather than face disincentives if they don't meet a quota.
Next, the vehicle quota system should contribute to a more sustainable vehicle population growth pattern, with as little social, economic and political cost as possible.
If it is unable to do that, a complete rethink is probably the thing to do.
Sometimes when we condense the post, we can see what the writer's agenda really is. Appears that he is more concerned about buying a new car, than the welfare of taxi drivers because he is going to be one.
I agree when he says "linking taxi availability to COE availability may only complicate matters further". Taxies are public transport vehicles and should be taken out of the COE system. But if this is done, then the reporter might drive a taxi as his own private car.
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Originally posted by EP77:
got open boot charge meh?
which yr are u born in?
got...
when veri young time... open boot got surcharge... but the TD will come down and put the stuff into the boot...
during TVDL...instructor also shared with us some stories about open boot surcharge...
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"cabbies need to be incentivised to pick up more fares "
yah man... as a TD who prefers to drive day partly due to body clock pattern... partly due to like having the evenings free for personal time...
BUT
now also lan lan siao siao do split shift... day sometimes zai bo lang also pay erp go into town look for pax WITHOUT any rewards...
thursday drove full coz wanted keep early...
2pm.. juz outside town... pay $2 erp go into town coz outskirts green taxis everywhere... wah go into town onli... almost all the hotels blinking lights... pick up a pax at XX hotel to AP... fare $14+... minus erp nett $12...
6pm... at same spot outside tiwn... pay $3 erp go into town... XX hotel bling call! mai tu liao... press yes... forgot got riverline erp... anyway pay $1 to reach XX hotel... start meter $10.55... reach AP $38++ minus erp nett $30...
definately "incentivised" !
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Originally posted by Khoon2580:
got...
when veri young time... open boot got surcharge... but the TD will come down and put the stuff into the boot...
during TVDL...instructor also shared with us some stories about open boot surcharge...
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Originally posted by komade:
haha, sat so early otr kumlan....