Taxi fare to be increased com Jan08
By ahgong
@ahgong (10064)
Singapore
December 6, 2007 12:33pm CST
I was sitting down and thinking about this issue for a while.
Let's take for example, the common model, Hyundai Sonata, that is being used as a cab here.
The average cost is about $80,000. The average lifespan of a taxi here is 7 years before the car is sent to the scrap yard.
Assuming that insurance is about $1000 per year due to the multiple driver coverage.
Assuming that the taxi travel about 1000km per day (24 hour day, 2 shifts). This would mean there is a need to service the car every fortnight based on a 10,000km cycle.
If every servicing cost $200 each time, that works out to $400 per month. $4800 per year.
The daily rental of a taxi is $92. That works out to $33,580 per year.
Cost of petrol is borne by the driver, so we will not work this costing into consideration.
That means, the company will have to fork out $80,000 + $4800x7 for the cab and its maintenance.
This will work out to $113,600 for the entire lifespan of 7 years.
Assuming there would be repair works for wear and tear for normal usage, we add another 20% to the cost for the entire 7 years. This will add another $22,720 which will bring the total to $136,320.
For easy calculation, we round up the figure to $140,000.
Now, the daily rental paid by the taxi driver to the company will then work out to $235,060 for the entire 7 years.
The profit to the company is like 67 percent!
And that is just for one cab! Imagine, there are 400,000 cabs in Singapore! The profits from rental alone is already more than enough to cover the cost of maintaining the fleet!
How come the cost of rental cannot be reduced slightly, to say $80 a day? That would allow the taxi driver to save at least $360 a month! And the profit margin of the Taxi company still works out to 46%!
Sigh... so now they are going to increase the fare. Some of the feedback received from the public is, if the cab companies are going to increase the daily rental after they increase the fare, it would have a negative effect, then what is the point of raising the fares in the first place?
The interesting thing about the business model of many companies is, instead of managing the cost of the business to maintain a profit margin, they prefer to just increase the price of the services to the consumer to maintain the profit margin!
It is frustrating especially when the consumer dollar is not increasing, but the cost of everything else is increasing!
This is just a story about cabs. Can you imagine the cost for trains and buses where they carry millions per day?
How do they justify that the cost is increasing each year when they are making 65% profits?
I guess if competition is really and truly available, then the profit margins would have been different eh?
1 person likes this
7 responses
@lordwarwizard (35747)
• Singapore
7 Dec 07
Geez, you really like numbers and all those lengthy analysis hor? Can I ask you a personal question? What's your job currently huh? If don't want to say, it's ok.
I only know that whatever they do, if I need to travel, I have no choice but to accept their fare. As simple as that.
This world is like that. Beggars cannot be choosers.
@ahgong (10064)
• Singapore
7 Dec 07
Ha ha ha... I am a system engineer.
Not much of a number person. Just that I get long commutes to work and my mind starts to wonder.
I am just trying to make sense of all the figures that are deemed increasing which I cannot compute.
So when I cannot justify it, I cannot accept the reasoning given behind the raise.
Simple as that. ;)
@poohgal (6845)
• Singapore
6 Dec 07
Wow. What a thorough analysis!
The fact is the consumers have very little bargaining power. Even if we are unhappy or disagreeable with the taxi price hikes, we will still take the cabs and then complain to the cabbie uncles about the price hikes. Ironic right? LOL
Personally, I am guilty of that. =P
When you are in a rush, no choice but to take cab mah.. even if it's expensive.
Anyway, I do not think the taxi companies care very much about their taxi drivers. If they do, they wouldn't give out so many taxi licenses. By giving out more licenses, the companies earn through rental. Many cabbie uncles have complained about 'too many taxis on the road' to me before. I listen until I sianz liao..
During off-peak hours, you would see many taxis driving around aimlessly. During peak hours, there are always not enough taxis because half of the taxi drivers will tell you they are 'changing shift' and refuse to pick you up =S
@ahgong (10064)
• Singapore
7 Dec 07
Well, taxis are indispensable for some people in certain jobs.
I remember back when I was a vendor doing support for systems in companies, we can only do work or upgrades on the systems in the night when the traffic accessing the servers are low.
And these hours that we are allowed to work is at the ungodly hours like 1 or 2 am and lasts till about 4 or 5 am.
Those are the times where we do not have the luxury of the public transport, be it the bus or the trains.
And in remote places like data centers in the far corners of the island, any public transport serving the area has already stopped.
So to get our jobs done, we have to take a cab in and take a cab home when we are done. So taking a cab for these people are a necessity rather than a luxury. And I am sure there are much more jobs out there that require one to work in unearthly hours as well.
Like some of the forum readers who wrote into straits times, the whole system has to be revamped before any good services can be seen from the taxi fleet as a whole.
Added the few black sheep that spoil the reputation of taxi drivers in recent months, I am sure the revamp would be welcomed.
@ahgong (10064)
• Singapore
14 Dec 07
I was going thru this weeks papers.
They are moving forward with the increase to the coming Monday. (17 Dec 2007).
So instead of waiting for Jan next year, it will be the period before Christmas. The period where most people will take cabs cos of last minute shopping. Laden with bags of goods and stuff, not likely one will want to struggle with other commuters in the train or the bus to go home.
Scheming buggers! I wonder when the rest of the taxi companies will follow suit. Humbug!
@whywiki (6066)
• Canada
6 Dec 07
Here in my town in Canada the taxis are independently owned and the owners pay the company for dispatch services and to handle the paperwork and take care of the business side of things. The Toyota Hybrids are currently the car of choice but some still use propane. The price of fuel and insurance and everything else associated has increased here. The fares had to go up just like everything else in life. Now that raise in the meters has been accepted by the public and business has recovered the owners and drivers are now making a living, not getting rich because I own a taxi and can attest to that. The government keeps making it easier and easier for private companies to transport passengers from hotels and cruise ships and other places that taxis typically make money from. The government has also made it so that we have to have the most fuel efficient vehicles on the road and are trying to push hybrids on us at a cost of $40 000 a car. Then to top it off the government has decided that we need security cameras in all the cars and this will be a financial burden on the car owners. The taxi association now has to go back and fight for another raise of the meters to offset the cost of this. It is a viscous and never ending cycle.
@ahgong (10064)
• Singapore
6 Dec 07
Well, at least you get to own the cab you are driving. Once the price of the cab has been paid off, the cost of driving the car is just the maintenance.
Many years ago it used to be like that for some companies.
But now that the bigger company has bought out these smaller ones, they are all on rental basis.
Asking for fare increase is one way to increase the income of the driver. But what is the figging point if later in the year they increase the rental again?
With road usages planned for a pay per use, where another additional 30 more gantries planned to be up for next year, driving is getting more and more expensive!
And road tax is not going to be reduced anytime soon.
With the higher cost of using the road coupled with a higher rental fee, what good is an increase in fares?
@lordwarwizard (35747)
• Singapore
7 Dec 07
The situation is only bad here. It is not even the ratio of taxi to people. Just look at Hong Kong and you will know.
@ahgong (10064)
• Singapore
7 Dec 07
Precisely! And we have a whole bunch of government sponsored scholars sitting at the top of so many ministries not able to think of something good to revamp the situation.
Mind you, those sponsored scholars are sponsored by tax payer's money. Your money and my money! And my tax dollars are not working hard enough IMHO.
All they can think of is to increase the cost of usage to hurt people in the pocket as a form of regulation. That is like so outdated!
@squaretile (3778)
• Singapore
14 Dec 07
yes this is really hitting the consumer hard.
and MRT trains are getting so extremely horribly crowded. i can't believe they are looking to increase the population of singapore! with more foreigners who don't own cars, the public transport system is going to get increasingly clogged.
i think I will avoid taxis for the time being. the poor drivers will suffer a backlash. the companies need to make money for their shareholders but the rental, i agree is far too high in the face of decreasing car costs. especially with decreasing COE prices.
someone should make these taxi companies wake up.
@ahgong (10064)
• Singapore
14 Dec 07
I was going thru this weeks papers.
They are moving forward with the increase to the coming Monday. (17 Dec 2007).
So instead of waiting for Jan next year, it will be the period before Christmas. The period where most people will take cabs cos of last minute shopping. Laden with bags of goods and stuff, not likely one will want to struggle with other commuters in the train or the bus to go home.
Scheming buggers! I wonder when the rest of the taxi companies will follow suit. Humbug!
@applefreak (3130)
• Singapore
7 Dec 07
hmm but there are more cost to that. things like road tax and admin cost. i believe the insurance cost is also much higher considering the hours on the road. taxi drivers are know to be dangerous drivers. they'd have to pay me at least $3k a year for me to insure them. also, taxi companies pay bonuses to drivers for staying with them, and other stuff that we may not be aware of.
@ahgong (10064)
• Singapore
7 Dec 07
I do agree that my approach is a little over generalizing the situation.
But those additional couldn't be that high to warrant such a high increase.
Back in the 80s, renting a cab cost only like $60 a day.
Correct me if I am wrong. Two years ago,it was about $75-80.
Current rentals are about $94-103.
My dad used to work as a taxi driver and he manages to put me through primary and secondary school.
My buddy's father was also a taxi driver and he managed to put two sons through tertiary education, both graduated with diplomas.
So it makes me wonder, why so many are still grumbling about not being able to earn enough when there are more passengers than cabs to go around.
@ahgong (10064)
• Singapore
14 Dec 07
I was going thru this weeks papers.
They are moving forward with the increase to the coming Monday. (17 Dec 2007).
So instead of waiting for Jan next year, it will be the period before Christmas. The period where most people will take cabs cos of last minute shopping. Laden with bags of goods and stuff, not likely one will want to struggle with other commuters in the train or the bus to go home.
Scheming buggers! I wonder when the rest of the taxi companies will follow suit. Humbug!
@coffeebreak (17798)
• United States
7 Dec 07
Wow! YOu did some math! But when gas prices go up, so does everything else. I hear in California it is high enough that many independent trucks (18 wheeler truckers) are saying when it hits (I think it was) $4.00 a gallon, they will not be able to afford to deliver in california anymore. That means merchandise of all kinds will stop coming into california, which means, what is here will increas and what little gets in will be expensive!
@ahgong (10064)
• Singapore
7 Dec 07
That is the very question I always wanted to ask.
The taxi companies just rents the cars out to the drivers. They do not provide the drivers fuel for driving the taxis. The cost of petrol or diesel is borne by the drivers, not the taxi companies.
Even when they are subsidizing the diesel or petrol that they sell to the drivers, the profits they make more than cover for the subsidies.
So higher fuel prices as an excuse to raise rents is really not an excuse at all!
All they keep saying is that they are concern that the drivers are not earning enough. So the onus is to increase the flag down fare and the distance rate so that the drivers can earn more. I can almost guarantee you that not long after the drivers get their fare increases, the rental fees will go up, citing unknown rise in operations costs. That would negate the increase in fares in the first place. Then the cycles goes all over again.
It is getting more and more like listening to a broken record over and over and over and over.... again!
@ahgong (10064)
• Singapore
14 Dec 07
I was going thru this weeks papers.
They are moving forward with the increase to the coming Monday. (17 Dec 2007).
So instead of waiting for Jan next year, it will be the period before Christmas. The period where most people will take cabs cos of last minute shopping. Laden with bags of goods and stuff, not likely one will want to struggle with other commuters in the train or the bus to go home.
Scheming buggers! I wonder when the rest of the taxi companies will follow suit. Humbug!
@keminem001 (779)
• Saint Lucia
7 Dec 07
it is not only the taxi fares that will be increased. lots of things will be increased. food, clothing, appliances etc. the cost of everything will go up. this is due to the inflation in gas prices and the fall of the U.S dollar.
@ahgong (10064)
• Singapore
14 Dec 07
I know that cost is increasing due to fuel and fall of the US dollar.
What the government can help to do is to reduce the tax on these items and cost could be controlled to some extend.
In stead of reducing cost for us, they are saying we have to bite the bullet and bear with it. Sigh~~~~!
I was going thru this weeks papers.
They are moving forward with the increase to the coming Monday. (17 Dec 2007).
So instead of waiting for Jan next year, it will be the period before Christmas. The period where most people will take cabs cos of last minute shopping. Laden with bags of goods and stuff, not likely one will want to struggle with other commuters in the train or the bus to go home.
Scheming buggers! I wonder when the rest of the taxi companies will follow suit. Humbug!
