The Age has published an article claiming that Sydney, Melbourne and Perth taxi fare are amongst the most expensive in the world:
…when it comes to trips from the airport to the city, …taxis in three Australian cities [were] named among the most expensive in the world, according to new research…
The survey, conducted on June 28, included cities in Australia, New Zealand, Spain, Russia, the United States and the United Kingdom…
Sydney ranked third on the list with an average taxi fare of $A3.95/km, making it the most expensive Australian airport to catch a taxi to the CBD. Sydney was followed by Perth at $A3.76/km and Melbourne at $A3.52/km…
[But] the survey did not allow for comparisons of taxi costs on the whole because airport fees were involved.
Set costs imposed on taxi drivers at airports such as pick-up and drop-off fees varied considerably from city to city and were diluted more or less depending on the distances to the central city…
“In a lot of places in Australia the airport fees are [only] about $2.”
I am not surprised by this result, given the deliberate undersupply of taxi licences across Australia’s cities.
The lack of competition amongst taxis has meant that there is minimal incentive to improve performance and provide better services, or to keep fares at a more reasonable level.
The high cost of taxi licences has also driven a wedge between the driver, who typically earns a pittance, and the customer, who ends up paying too much for the service.
As with land, the rental value component of taxi fares goes to the owners of the plates, just like rents on land. So taxi drivers are typically left paying the licence holder an exorbitant share of their fares, leaving them with little left over.
An obvious solution, in addition to freeing-up the taxi licencing regime to provide greater competition, is to allow ridesharing services, like Uber, to operate on Australian roads subject to meeting basic performance standards.
As argued previously, ride-sharing would provide greater choice to consumers and lower transport costs, while also improving productivity by facilitating a more efficient use of the existing transport fleet. It would also offer drivers greater options to derive an income, without paying exorbitant licence fees or rents to taxi plate owners.
Australians should be free to choose their transport options, not have them dictated to by the government for the purposes of protecting the taxi industry, leaving both consumers and drivers worse-off.
