Taxis in Singapore's Public Transport Landscape

Mr Lim Biow Chuan asked the Minister for Transport whether the Public Transport Council (PTC) could review its current policy of de-regulating taxi fares and whether previous objectives of de-regulation of taxi fares have been met.

Ms Tin Pei Ling asked the Minister for Transport (a) what defines public transport in Singapore; (b) how do taxis feature in our transport system and whether they qualify as public transport, either de jure or de facto; (c) whether the market share of Comfort DelGro's cabs (which include CityCabs) constitute market dominance; and (d) whether his Ministry will consider defining peak periods.

Mr Gerald Giam Yean Song asked the Minister for Transport (a) what measures has the Government put in place to ensure a sufficient level of competition among taxi operators; (b) whether these measures are adequate; and (c) whether further measures to ensure greater competition for the benefit of consumers will be implemented in the near future.

The Minister for Transport (Mr Lui Tuck Yew): Mr Speaker, Sir, with your permission, I would like to take Question Nos 6, 7 and 8 together.

Mr Speaker: Yes, please.

Page: 927

Mr Lui Tuck Yew: Sir, public transport is a service that is available to any member of the public as a means of travel from one location to another for a fare. It includes our public buses, trains and taxis. Taxis are positioned at the higher end of the public transport spectrum, filling the gaps between buses and trains, and providing a door-to-door service that is closer to that of private transport.

The setting of taxi fares was deregulated in 1998 and the supply of taxis was deregulated in 2003. The objectives of these two measures were to inject greater competition within the taxi industry and allow market forces to determine the supply and pricing of taxis that best meet the demand for taxi services.

Since the deregulation of fares, taxi companies have made both upward and downward adjustments to their fare structures in response to changes in demand for taxi service. For example, to encourage commuters to call book for taxis during peak period where demand is high, some of the taxi companies have reduced the call booking surcharge from $4.00 in 2005 to the current $3.30. Taxi companies have also delayed the commencement of the evening peak surcharge period from 5.00 pm to 6.00 pm given that a significant number of commuters now leave work later with the implementation of a five-day work week in Singapore. On the other hand, as the demand for taxis in the evenings after 8.00 pm continue to be high resulting in feedback on the difficulty of getting a taxi after 8.00 pm, taxi companies have extended the evening peak surcharge to midnight, instead of ending it at 8.00 pm to better match the demand and supply for taxi service. Concurrent with the extension of evening peak hours, taxi companies have chosen to soften the impact of this extension by reducing the peak surcharge from 35% of metered fare to 25%.

Besides using fare changes to better match the demand and supply of taxis at different times of the day, taxi companies have also expanded their fleet size to meet the general increase in taxi demand. When compared against the period prior to liberalisation in 2003, the total number of taxi trips increased by 13% from 2003 to 2011 while in the same period, the size of the taxi fleet increased by 27%.

Over the years, the taxi industry has also become more vibrant with the entry of new taxi companies into the market. Consumers can choose among seven taxi companies, up from the previous three companies prior to deregulation. The taxi services rendered have also become more varied, catering to the wide-ranging demands of the commuters. For instance, taxi companies have brought in many more models of taxis into the market, including larger taxis with higher seating capacity up to seven passengers, as well as the introduction of additional modes of fare payment such as credit card, NETS or stored value card which has brought greater convenience to passengers.

The LTA's role in the liberalised market is to facilitate its workings and ensure that quality service is provided. To do this, LTA sets Quality of Service (QoS) standards for taxi companies to comply and also administers the Vocational Licence Point System (VLPS) on taxi drivers.

Under the QoS framework, taxi companies are required to meet standards on call bookings, safety, taxi drivers' conduct, etc. Companies that fail to meet the requisite standards are liable to be penalised financially. In October 2011, the LTA tightened the QoS system. Call booking monitoring was extended to the morning peak period on weekdays, from 6.00 am to 11.00 am. LTA also fine-tuned the computation of call booking performances from averaging over a three-hour period to an hourly basis.

Page: 928

Besides regulating the taxi companies, the LTA also takes a serious view against any misconduct on the part of taxi drivers against the interest and safety of taxi passengers. Regular enforcement checks are carried out by LTA at various hotspots to nab errant taxi drivers and deter would-be offenders. Under the Vocational Licence Point System, taxi drivers who infringe the LTA's rules and regulations will be imposed with composition fines and demerit points based on the severity of the offence. The accumulation of demerit points will lead to the suspension of vocational licence and, in severe cases, the revocation of the licence. Sir, I would like to take this opportunity to encourage members of the public to provide feedback on who they believed to be errant taxi drivers to help LTA step up its enforcement measures and ensure quality taxi service on the ground.

Sir, in summary, the deregulation of the taxi industry has brought about benefits to commuters. Specific to the recent round of fare revisions by the taxi companies, I acknowledge the public's expectation for better quality service with any fare increase. Hence, besides continuing to monitor the performance of taxi companies with respect to the current QoS, LTA will also study how the QoS system will need to be adjusted.

On Ms Tin's question regarding the market share of ComfortDelgro's taxis and whether this constitutes market dominance: allow me to clarify that market share, while it is an important factor, is not in itself a sufficient indicator. Other indicators, such as presence of any market barriers, contestability for the industry, degree of service innovation, and so on, should also be considered, and I believe the taxi industry fares well on balance. Ms Tin may also wish to note that ComfortDelgro's market share has declined from 86% in 2003 to about 58% today, indicating that competition within the taxi industry has indeed intensified over time.

Ms Tin also asked if we would consider defining peak periods. With the deregulation of taxi fares, peak periods are determined by taxi companies based on their assessment of market demand and supply of taxis at different time periods of the day. We currently have no plans to re-regulate taxi fares but we will continue to work closely with the taxi companies to study other measures to better match demand with supply and improve service standards for the benefit of commuters.

Ms Tin Pei Ling (Marine Parade): Sir, I thank the Minister for the comprehensive reply. I would like to ask, in light of the recent episode whereby ComfortDelgro taxis initiated the rise in taxi fares, a lot of Singaporeans felt that the definition of "peak period surcharge" has been exaggerated. Therefore, I would like to ask if the Ministry would consider, if not defining "peak period", putting other levers in place so as to prevent exaggeration or irresponsible changes to cab fares. As the Minister has pointed out, taxis are seen as part of the public transport system in Singapore which a lot of Singaporeans do rely on to get from Point A to Point B.

Mr Lui Tuck Yew: Mr Speaker, Sir, let me thank the Member for her supplementary question. I think the genesis of the extension of the peak period in the evening beyond 8.00 pm arose because there was a lot of feedback of the difficulty of getting taxis after 8.00 pm and prior to midnight. Normally, our taxis are actually under the two-shift system, although a good number of them are driven by only one driver. Therefore, the rational behaviour would be such that the driver would pick the best time to drive his taxi. And for him, the best time is the revenue that he would derive as a result. And hence, with the peak period in the past stopping at 8.00 pm, there was a lot of feedback on the difficulty of getting a taxi, including through call bookings. Hence, that was one of the main reasons why the taxi companies starting with ComfortDelgro decided on the need to extend the peak surcharge period.

Page: 929

Mr Gerald Giam Yean Song (Non-Constituency Member): Mr Speaker, the fact remains that each time ComfortDelgro raises their fares, all the other companies follow suit. Does the Minister agree that this is a clear indicator that there is insufficient competition in the taxi market? And if so, in the absence of sufficient competition, will the Ministry of Transport (MOT) consider re-introducing some form of fare regulation?

Mr Lui Tuck Yew: Let me thank the Member for the supplementary question. It is a good question. But it is also behaviour that extends beyond the taxi industry. For example, for those of us who drive, we find it somewhat coincidental that petrol prices, when they go up, they go up across the different companies – Shell, Esso, Caltex, and so on.

And I think the Competition Commission had actually investigated and explained this in the past. There are good economic explanations for such behaviours. ComfortDelgro, I think, now has more than 50% of the market share, dropping from 80-plus percent in the past. We now have more players in the industry. But I think they also, in a sense, draw reference from the behaviour of the market leader. So there is a certain harmonisation in that sense of the fares over time, in terms of, for example, flag-down rate increases after every 400 metres, but there are also differences. For example, in the booking fees – in the advanced booking fees and the current booking fees – there are variations across taxi companies. It is not a complete harmonisation across the seven companies.

We have looked at it, we felt that there is no need at this time to re-regulate the taxi industry according to fares. What we want to do is to look very closely at the quality of service and see what else needs to be done in this regard.

Mr Lim Biow Chuan (Mountbatten): If I can ask the Minister: the constant complaint is that there are long waiting times for taxis. Can the Minister share with the House whether the waiting time has been cut down ever since the taxi fares have been increased? How else can LTA help to improve the service? Would LTA be prepared to review the Quality of Standard service for taxis? Another question is whether the Minister will agree that having so many types of surcharges will confuse most taxi commuters. Will LTA regulate the imposition of such surcharges?

Mr Lui Tuck Yew: Mr Speaker, Sir, let me thank Mr Lim for his two supplementary questions. It is still early days yet because it has been barely a month since the increase in the fares. We do not yet have the full picture but based on what we have been able to gather so far and in some instances I would also draw comparisons with what took place in 2007 – with regard to the Member's specific question on waiting times, there is an improvement in waiting times, both within the CBD and outside of CBD. It has also been easier to call book for a taxi. So that is the initial indications that we have.

What we need to do is to see how this pans out over a longer period of time because we know that in 2007, we saw some variations and then over a period of time it stabilises. This is similar to the earnings for taxi drivers. In 2007, when fares were last increased, for the first two months, there was a decline and after the third month, we saw an increase. And when we compared it on a year-on-year basis, in the first year, we would see about a 10% increase in the revenue for the taxi drivers. So, I would say that it is probably still early days but the early indications are that, for waiting times, there is an improvement.

Page: 930

With regard to surcharges and whether this confuses the public: I think the point is that the demand for taxis varies according to the time of the day and it also varies according to the location. If you do not have surcharges that will also influence the behaviour of the drivers as well as to shift the supply patterns, what you will find is that in some instances and in some locations, it will become very, very difficult to get taxis. We saw this before the recent round of fare adjustments, where we had quite a bit of feedback that it was very difficult to get a taxi after 8.00 pm. Now, there is hope.

Er Dr Lee Bee Wah: Mr Speaker, Sir. I would like to ask the Minister, compared to pre-liberalisation and post-liberalisation, is there a reduction in the number of complaints? Is there an increase or improvement in the service? Did we achieve the objectives set out in the liberalisation? Next question – very often my residents tell me that their experience in taking taxis in Hong Kong is much more pleasant, much faster though they have smaller fleet of taxis. So is this true and is there any lesson that we can learn from Hong Kong?

Mr Lui Tuck Yew: Sir, I do not have the data with me with regard to whether there has been an increase in complaints. I ought to get back to the Member on this. We hear the same feedback with regard to taxi service in Hong Kong that you have taxis waiting for commuters and that it is so easy to get a taxi. And there are no peak surcharges. From the commuters' point of view, it is not a bad situation. The flipside of it, as we also hear from the drivers, is that they find it a lot more difficult in terms of making a living. The indications are that they seem to be working much longer hours compared to the taxi drivers in Singapore. There are two sides to the equation. In the case of Hong Kong, it may be easier for the commuters to get a taxi but, on the other hand, quite a lot more difficult for the taxi drivers.

If I were to just give a quick comparison in terms of fares, for instance, this is after the increase that has taken place in December of last year, for a 10-km trip in Singapore, off-peak period, it is about S$10 and with the 25% peak surcharge which has gone down from 35%, it would be about S$12.30, during the peak period. In Hong Kong, they do not have the surcharge but for a 10-km trip, I think it is about $14.50. So the fares are higher. It appears to be easier for the commuters to get a taxi but we also know that it is more difficult for the drivers to make a living.

Mr Speaker: Mr Low Thia Khiang, last question please.

Mr Low Thia Khiang (Aljunied): One supplementary question, Sir. I would like to ask the Minister whether he is aware that taxi drivers' income is also affected due to the fare revision. There seems to be fewer people taking taxis now. I would like to ask whether the revised fare has exceeded the threshold that commuters who take taxis were prepared to pay.

Mr Lui Tuck Yew: Mr Speaker, I thank the Member for his question. This is an interesting question, which is why in my earlier reply I said that it is still early days because it has only been a month since the introduction of the fares. The last time this happened was in 2007. We also had the same initial feedback from the drivers that the increase affected their livelihoods, the takings went down. Indeed, when we looked at the data that we collected, it was so for the first two months after the last fare increase in 2007. But by the third month, it had actually exceeded the data prior to the adjustments and thereafter, it went up. Overall, if you then, in a steady state compare on a year-to-year basis, in their first year, their revenue actually went up about 10%. That was the last fare increase. This time round, it is only a month since the increase took place in December last year, so we will need to have more time to collect the data and then we will be able to do a better analysis.

Page: 931