December 22, 2012 8:11am by David Farrar

Taxi fares

Carla Penman at Stuff reports:

The most expensive cab company in Wellington can charge as much as a quarter more for a ride than the cheapest operators.

Yes, that is called competition.

And fares in the capital are twice as much as those in the regulated market of Melbourne, Australia.

Is it?

Prices for a simple 10-minute, 3.9-kilometre trip from Cuba St to Hobson St in Thorndon, at the same time of night, on the same route, in light traffic, ranged from $15.40 in a Kiwi Cab, to $18.40 in a Green Cab, to $20.20 in Combined Taxis – a massive 24 per cent difference. This included callout and eftpos charges.

It’s certainly easy to get a cab in Wellington. The city seems to be awash with taxis. On any given day, especially along Courtenay Place, dozens of cabs are lined up waiting for customers.

There are 11 companies chasing different kinds of customers.

Yet strangely, despite all this competition, prices are still around double what you’d pay in Melbourne – where taxi fares are regulated.

Okay, let us look at this Melbourne fare website. A 4 km, 10 min journey would be:

Booking Fee $2.00
Flagfall $3.00
Kms 4 x $1.62 = $6.48
Wait 6 x $33.96/60 = $3.40

That is a total of Au$14.88 or NZ$18.80, and that presumably the EFTPOS fee which was included in NZ and not known in Australia.

Each cab has to display its company’s charges both inside and outside the vehicle. Companies tell their drivers to have their meter set to charge a certain amount, depending on the time and distance travelled – this is called the tariff.

The meters are checked by New Zealand Land Transport, to ensure they are charging at the advertised rate.

That should mean the customer can quickly calculate the cheapest cab on the rank, right?

In theory, yes.

But it’s not easy for the average customer to figure out the total fare from the baffling array of charges listed.

For example, there’s the call-out fee, the flagfall (starting rate), the tariff (the price per kilometre travelled), a fee for using eftpos and waiting time per minute.

If you manage to add all those up, you then need to try to calculate the total fare by estimating the distance to be travelled and multiplying it by the tariff – and that’s just too much for most customers. Either they don’t bother and just grab the most available cab, or even if they do calculate it according to the rates, it’s not a reliable guess – because it depends on the route the driver takes, and the amount of congestion.

First of all many customers do not want the cheapest cab on the ramp. We have a market where you can choose cheap and nasty or more expensive and reliable. I will always choose a Combined cab over any other cab, for several reasons:

Their drivers speak English
Their drivers know where most roads are
Their cabs don’t tend to stink of food
They always have eftpos and take taxicard

But I do agree prices are hard to calculate. What I think would make a difference is having the NZ Transport Agency listing the tariff schedules for all taxi firms in each city on a website. I’d love to be able to compare the prices of Combined and Green Cabs (who aren’t too bad) so I know in advance the approx cost of each.

With most customers simply unable to figure out the likely fare, Combined Taxis has been able to quietly increase its fees, relying on its market dominance to keep customers rolling in.

This sounds like the normal competitors whining. Combined do well, because they provide the best service in my opinion. I also know a lot of women who will only use Combined because they feel safest with them.