19 July

Taxi firms hit brand-new bump - greater govt cost

The embattled taxi industry, which has been reeling from disruptors such as Uber and Grab, is facing another blow - greatly higher federal government fees. The Land Transport Authority (LTA) has informed operators that their operating licensing fee will rise from 0.1 percent of gross earnings to 0.2 per cent this year and after that to 0.3 percent next year.

This is the very first such boost in more than 10 years.

For a mid-size operator such as SMRT, the charge hike translates to more than $1 million in additional expenses each year. Based on its taxi income for the previous two fiscal years, its fee would increase from an approximated $1.4 million to $4.2 million next year, assume revenue continues to be constant?

Operators called were furious but resigned. "It's not as if the rate is negotiable." Another said: "That's a doubling and trebling of fees in simply 2 years. We're going to appeal. It may be ineffective however we need to register our demonstration."

The LTA was not available for remark but The Straits Times comprehends that the cost hike has to do with higher costs associated with monitoring taxi service standards. Presently, private-hire operators such as Uber and Grab do not pay this charge. Their service requirements are likewise not kept an eye on by the LTA.

National Taxi Association executive adviser Ang Hin Kee stated operators might pass the expense on to motorists by raising rental charges. "Higher expense might flow downwards," he included. For cabby S.C. Wong, it is already beginning to drip down. Mr. Wong, 64, said ComfortDelGro has been attempting to encourage him to swop his Hyundai Sonata for a more expensive Hyundai i40 cab.

“I refused because it costs 30 percent more. The marketplace is extremely bad now," he said.

“My profits have actually fallen by 20 percent to 30 per cent from in 2014, when Uber and Grab began full swing. My call reservations have dropped too." Mr. Wong, who has actually been driving a taxi for 15 years, stated the i40's higher flagdown fare of $3.70 - 50 cents higher than the Sonata's $3.20 - "cannot cover the $30 increase in rental".

ComfortDelGro said the higher rental reflects the greater purchase cost of the i40.

The i40's leasing is $130 a day while the Sonata's is as low as $100. This implies ComfortDelGro generates nearly $88,000 more in rental per taxi over its eight-year lifespan. Singapore's most significant cab operator is likewise trying to woo cabbies who have actually stopped with a two-month 50 per cent rental discount rate. Market players said the portion of unhired cabs has actually increased - from single digits prior to 2013 to more than 10 per cent now for some operators.