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Taxi Times International - June 2015 - English

  • Text
  • Taxis
  • Uber
  • Drivers
  • Global
  • Fares
  • Mobility
  • Passenger
  • Prices
  • Hydrogen
  • Association

OUR COMMENT OUR COMMENT

OUR COMMENT OUR COMMENT DO GOOD AND TALK ABOUT IT THE PRICE AND THE MONOPOLY Some customers, journalists and politicians see the taxi trade as an increasingly expensive and antiquated product. It is time to get to the bottom of this issue. Shortly before Taxi Times Publishing was founded at the beginning of 2014, and independently from this development, the first discussions took place on the creation of an international taxi network. Now we have both the Taxi Times Magazine (with newsletter update) and the Global Taxi Network (GTN) founded by the IRU. Their goal is to reinforce the international taxi trade network. Taxi Times reports on the developments of the GTN in every edition – this time on page 16. “The taxi industry needs to understand that it should position itself towards competitors on the market by improving its service and reducing its prices.” This comment was made by a blogger on the online portal of the Huffington Post, and he is not alone in his opinion. It reflects what many customers think, what a number of journalists are reporting with their half-baked knowledge, and some politicians with their propensity to polarise and repeat unsubstantiated remarks. One need only think back to the words of former EU Competition Commissioner Neelie Kroes, who said that the first bans on a U.S. ridesharing app were crazy, in April 2014. “This is about protecting the taxi cartel”, she ranted at the time. The German monopoly commission also made a lot of noise about the ‘competition deficit in the taxi market’ in its annual report last year, claiming that access to the market is heavily limited by Jürgen Hartmann and Wim Faber. the permit system and that mandatory rates get in the way of price competition. But does limited price competition really justify being called a monopoly? In many of the world’s regions, taxi fares are set by the state and only apply within a pre-defined area. In other countries where the state has withdrawn its regulatory responsibility and deregulated the taxi market, taxi associations and circuits slowly took over the role of price regulator after a somewhat anarchical transition phase. TAXI MUST GUARANTEE MOBILITY It was also urgently needed, since the taxi, as an integral part of the public transport system, must guarantee mobility to as wide a segment of the population as possible. This is why taxis must be available 365 days a year, seven days a week, 24 hours PHOTO: Gudrun Hartmann a day. There are definitely major differences to free competition. If a severe storm destroys an entire asparagus harvest, the consumer has the freedom to buy cauliflower instead of the sinfully expensive asparagus. But if a passenger needs to be taken someplace quickly for whatever emergency during a storm, he has no alternative in such moments other than an ‘overpriced’ taxi. The free rate setting that ‘monopolyopposed’ economic liberalists are so fond of demanding for the taxi industry, among others, must therefore have limits, or at least a ceiling. But putting an upward limit on prices without a downward limit in a fragmented market like the taxi trade, with its many independently operating companies, only encourages destructive competition. NO SOFT-DRINKS Dumping prices in the form of loss leader promotions only work when the lost revenues can be compensated for as part of a mixed calculation. Supermarkets can offer a ‘sensational discount’ on cauliflower because the customer also buys meat and potatoes on the way to the cash register at profitable prices. Hotels can offer double rooms at the weekend at an inexpensive family rate because business customers and trade show visitors have already paid four times the rate during the week and boosted the profit margin. How should a taxi compensate for a half-price ride? The driver does not sell soft drinks to his passengers for €4.00 that he bought for €3.50. And he can only charge the preset upper rate on New Year’s Eve – which is a good thing, as mentioned above. Nevertheless, this argument is not a justification for things to continue just as they always have. In the end, every sector must adapt to the customer’s wants. It must also create new services when customers develop new needs in the wake of societal changes. Still, the journalist we quoted at the beginning of this article is oversimplifying matters. IF YOU OFFER GOOD SERVICE, YOU CAN DEMAND A HIGHER PRICE He calls for the taxi industry to improve its service and reduce its prices at the same time, but what he says is contradictory. If you offer good service, you have the right to demand a higher price for it. Should an airline that includes luggage and in-flight meals in the airfare charge less Here is a quote by a journalist from Wirtschaftswoche, a German business magazine, who made a comment about a negative experience he had and which he takes as an opportunity to demand the elimination of the taxi monopoly. He could have saved himself a lot of hassle and frustration if he had been aware of some of the rules and regulations. But more on that later. We would first like to share his comment: “Recently in Berlin, I left for an appointment in Mitte. The event was located not two kilometres from the editing office. But it was raining cats and dogs. Fortunately there is a taxi stand around the corner at which several taxis were waiting. I got into the first taxi in the line and told the driver where I wanted to go. He shook his head and moaned that the trip would not be worth his while. […] So this is what it has come to. The customer is the scapegoat because the driver does not agree. Many people have already had similar experiences. It is the consequence of a regulated market that does not allow competition. The taxi monopoly must be abolished immediately.” The journalist came to a bold conclusion. But the taxi market is not at all as regulated as he suggests, not even in Germany. Every passenger is free to choose the taxi he prefers. The cleanest, the biggest, or the one with the friendliest driver. That is competition. Moreover, there is a special rate for short trips in Berlin. Trips shorter than two kilometres cost significantly less when the passenger hails the taxi from the street. The journalist was unaware of either of these facts and the driver missed the opportunity to inform him. The taxi trade and its customers sometimes have communication problems. jh than a competitor that demands additional fees for luggage and €3.00 for a glass of water on board the plane? Unfortunately, a fair number of our colleagues in the taxi industry offer a poorer level of service than that of Ryanair, yet demand the kind of prices Lufthansa charges for an 8:00 a.m. Monday morning flight, based on the fixed rates. But the taxi trade must not align its price/performance ratio with the worst drivers; it must instead gather up the resolve and the courage to trim away the worst service providers from its ranks and raise its level of service up to that of Lufthansa. IT’S NOT NECESSARY TO REINVENT THE WHEEL But creative ideas must be developed at the same time to acquire customers as passengers who have until now considered taxis too expensive. Local communities must be given a more effective alternative to operating expensive, municipally financed bus lines. Standardised booking and accounting tools need to be developed. There is only one thing the taxi trade does not need to do, and that is reinvent the wheel. Good ideas can already be found everywhere in the world. The sharing app in Vienna is one example. It allows several passengers to share a taxi, making it cheaper for all. Taxi companies and circuits everywhere have decades of experience in rapidly dispatching vehicles. Why not act as a service provider for the municipalities and integrate the other forms of transport within the hailing service? Different kinds of taxis, including electric taxis and even the first hydrogen taxis (Rotterdam), are operating in the Netherlands and Stockholm. Policy and industry have rewarded this environmental commitment by assigning them priority lanes at the airport. We also report on some of these ideas in this issue. Is there any particular development that you have noticed? We have not used the word ‘Uber’ once in this article. We did not have to, because this industry is capable of more than just an ‘app’. Jürgen Hartmann EDITOR Wim Faber EDITOR 6 TAXI JUNE / 2015 7

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