TAXIS IN THE CENTRAL BUSINESS DISTRICT

Mr Noris Ong Chin Guan asked the Minister for Communications and Information Technology whether his Ministry has any plan to address the shortage of taxis in the Central Business District during peak hours.

Mr Yeo Cheow Tong: The demand for taxi service varies according to location and time of day. There is no shortage of taxis in the CBD during the morning peak period, as many taxis carry commuters into the CBD. The waiting time for taxis in the CBD is, however, longer during the evening peak period as fewer commuters enter the CBD. Taxi drivers are also less willing to drive an empty cab into the CBD incurring ERP charges. According to LTA's data, the average waiting time for taxis at taxi stands within the CBD is 0.5 minutes during the morning peak and 16 minutes during the evening peak. During off-peak periods, the supply of taxis usually outstrips demand.

Given this situation, the question is how does one meet the demand for taxi service at different times of the day and at different locations in the most optimal and efficient manner. From a business angle, it is not optimal for taxi companies to size their fleet based on peak-period demand, as they would be having excess capacity during off-peak periods.

The solution lies in differential pricing to balance supply and demand. The Government has deregulated the setting of taxi fares in September 1998 for this purpose. With deregulated taxi fares, taxi companies are given the full flexibility to adjust their fares in response to demand patterns and changes in ERP pricing.

The problem of taxi shortage in the CBD is best addressed by the taxi companies, through fare adjustments so that taxi drivers will have the necessary incentives to enter the CBD during the evening peak period. Market pricing of taxi services is the most effective way to balance supply and demand throughout the day.

If commuters in the CBD find the wait for a taxi during peak periods to be too long, they can choose from a range of taxi booking services. These charge a premium according to the service level offered, including response time and the certainty in obtaining a taxi.