Part D – Understanding and improving industry performance (PDF ...

A further summary of these data is provided in Table
10.5. This indicates that 15 per cent of trips involve some
form of ‘dead running’ beginning or ending outside of
the zone. Further analysis of these data reveals that 5.9
per cent of trips taken with taxis affiliated with Frankston
start a journey in the outer suburban zone and finish
in the metropolitan zone; this applies to 8 per cent of
Dandenong taxis’ trips. These data suggest that there
would be some immediate efficiency benefits from
merging the two zones, as taxis would no longer need to
run back empty.
Table 10.5 Overall outer suburban trip zone start and
end zone statistics
Trip type
Beginning inside the outer suburban zone and
ending outside the outer suburban zone
Beginning outside the outer suburban zone
and ending inside the outer suburban zone
Beginning and ending wholly inside the outer
suburban zone
Beginning and ending wholly outside the outer
suburban zone
Total proportion of trips either beginning or
ending outside the outer suburban zone
Source: TII
% of total
12.4%
1.3%
85%
1.3%
15%
This does not account for the number of trip refusals
by taxis that refuse to go out of zone. There does not
appear to be any way to measure this effect, although
a submission by Frankston taxis suggests that dead
running is a problem for metropolitan zone taxis that
refuse to service Frankston-bound fares. 94
The benefits from zoning are often couched in terms of
better service. This argument only has force if zones were
amalgamated and there were very different licence values
between the two merged zones. That is because vehicles
will tend to work more in the area with the higher licence
value (indicating greater profitability), leaving the other zone
area less well served than before. Of course, any drop in
service could also be addressed with the release of more
licences until the profits available in each area are similar.
The inquiry notes that licence and assignment values
(profits) that may be earned in servicing outer suburban
zones are not substantially less than those earned in
servicing the metropolitan zone. Data from the VTD
indicates that, in 2011, average assignment fees per
month in the outer suburban zone were within 20 per
cent of those recorded in the metropolitan zone (around
$25,000 compared to $30,500 in metropolitan areas) and
licence prices were over $430,000 in the outer suburban
zone. This suggests that removing the zone will not
cause many (if any) taxis to seek work outside the outer
suburban zone.
Equally, the inquiry notes that a similar case could be
made with respect to the Western Port and Port Philip
zones, where the last recorded licence sales were in
excess of $300,000. During discussions with Peninsula
Taxis, the inquiry was advised that licences are now
considered to have a value as high as $800,000 in the
Mornington Peninsula zones.
There is some performance data that shows that the
‘overall satisfaction’ of consumers is higher for Frankston
and Dandenong taxis. The DOT surveys of satisfaction
have generally found higher ratings for these services:
Analysis, using the last 12 months of data, revealed
that Frankston Taxis and Dandenong Taxis continued
to receive the highest ratings by taxi travellers (78.1
and 71.7 respectively, on the 0-to-10 scale), whilst
the two most widely used taxi companies, i.e. Yellow
Cabs and Silver Top Taxis, received the lowest ratings
(64.8 and 62.4 respectively). 95
The inquiry notes that this service performance does not
imply that amalgamation of the zone will lessen such
performance. Current superior performance does not
necessarily demonstrate that amalgamating the zone
will cause worse performance within the old zone area.
In fact, there are three reasons to expect that there will
be no deterioration in performance and that service
performance could in fact improve:
• The similarity of licence values between the zones
indicates that vehicles affiliated to the Frankston and
Dandenong networks will not have a major incentive
to work solely outside these areas.
• There should be a relatively equal number of vehicles
that come into the Frankston and Dandenong areas
for fares as leave these areas for fares terminating in
the current metropolitan zone.
• Finally, it is not obvious why the advantages of NSPs
in the outer suburban zones will not remain a source
of competitive advantage over the metropolitan zone
NSPs. Increasing the scope for competition between
NSPs in these areas should benefit customers.
94 Frankston Radio Taxis Pty Ltd (2009), Review of the Boundaries of the
Frankston Taxi Zone – Submission to the Victorian Taxi Directorate,
provided to the Taxi Industry Inquiry by the VTD, p.11
95 Wallis (2010), Op. Cit.
Understanding industry performance CUSTOMERS FIRST 211