Solving cabbies' income problem

Media reports say that the current fuel surcharge for taxis in Beijing will be withdrawn in June following a public hearing on taxi fare this month. But that may not be the best way to deal with the taxi fare problem, says an article on gmw.cn. Excerpts:

Taxi drivers have been complaining that they do not make enough money because they have to pay a large part of their incomes to taxi operating companies and suffer losses owing to severe traffic jams in Beijing. So going by economic laws, it would be reasonable to increase taxi fare to improve cabbies' income, with many people suggesting that the entire extra revenue should go to cabbies.

But taxi drivers' problems cannot be solved just by raising the fare. For example, taxi service in Hangzhou, Zhejiang province, has not improved despite a substantial increase in taxi fare.

Besides, some cabbies are not in favor of raising fare for fear of losing passengers. The key issue lies in the operation system. Chinese cities follow two management modes. According to one, taxi enterprises own the license and rent out a vehicle to a driver. In the second, the owner of a taxi gets the operating license after a high price and is entitled to either drive the vehicle himself/herself or rent it out to someone else. But in both cases, relevant departments and affiliated enterprises share the profit.

Therefore, taxi drivers' income can increase only when this system is changed. The experience of other metropolises in the world, such as London and Tokyo, show that the market should play the most important role in taxi services instead of government departments managing the operating license system and dictating terms to cabbies.

(China Daily 05/03/2013 page9)