Taxi passengers in dark over fares

22:57, Jan 17 2013

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


The article "Taxi passengers in dark over fares" (December 22) wrongly stated that Wellington Combined Taxis is the city’s most expensive cab company.

While Combined was the more expensive of three companies tested on a 3.9km trip, this does not mean Combined is generally the most expensive of Wellington’s 11 taxi companies.

Combined has not increased its fares since October 2011. The error is regretted.


The Victoria Taxi Association said cab fares in Melbourne were half those in Wellington, but closer analysis suggests taxis there are only 5 to 15 per cent cheaper.

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

In Wellington, the cost of a trip can very widely, even within the same cab company.

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.

To understand how this has come about, you need to know something about the taxi industry.

Before 1989, taxi fares were regulated by the government. In 2005, after criticism in a report from the auditor-general that cab numbers had ballooned and service had bottomed out, cab companies were allowed to set their drivers' fares.

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.

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.

No-one's saying the firm is doing anything illegal - it is just taking advantage of reforms that have created an oversupply of cabs but no real competition on price.

SOME say we'd be better off with a maximum-fare system like Australia - where prices are half what we pay.

A maximum fare is when drivers can negotiate fares directly with individual passengers. Average fares vary for a 5-kilometre journey from between NZ$8 in Darwin and NZ$10 in New South Wales - compare that to $15-$20 for a 3.9km journey in Wellington.

Victoria has a fixed single tariff fare structure where all cabs tend to charge approximately the same maximum fare. Therefore there is no real price competition.

Victoria Taxi Association spokesman David Samuel says a maximum fare gives consistency and convenience for the customer. They had been criticised for a lot recently, but he hadn't heard of complaints from people who had felt deceived when they went to pay.

"At the end of the day New Zealand fares are twice as expensive as ours so it certainly can't be argued that unregulated fare-setting has produced the lower costs associated with the apparent increase in competition."

But local taxi operators are not so convinced a maximum fare system is the answer.

Green Cabs Wellington manager Toni Shuker says people choose Combined Taxis because they have more vehicles available.

"Wellington Combined Taxis used to have one of the lowest fares in Wellington. Once they got a majority of the market, they put their fares up."

She says maximum fares would most likely be better for the customer, but not for the drivers. They are appropriate between point A and B when there were multiple routes, such as heading to the airport by going through the tunnel or around the bays. She says the meter is a simpler and fairer way of operating.

A Kiwi Cabs manager, who declined to be named, says their approach to maximum fares ultimately came down to the decision of the driver. Sometimes on quieter nights where there might be little traffic, they allowed customers to set maximum fares.

Combined Taxis did not respond to several emailed questions, but a spokesperson, who refused to be named, says the company positioned itself in the market in a way that was fair and reasonable. Green Cabs targets the student market, Corporate Cabs charges a bit more for its corporate service, while Combined is somewhere in the middle.

New Zealand Taxi Federation Wellington branch secretary George Tyler points out that the New Zealand system offers more taxis so service is quicker and customers have more choice. In the main centres, at least, there are more taxis than are required to meet demand.

"Prior to deregulation a taxi would do 30 or more jobs a day; now 10 or 12 is the norm."

Tyler says taxi companies can and do set special rates for regular customers - a kind of maximum fare system.

He doesn't see re-regulation of the industry as offering a quick solution.

"Re-regulation of numbers and fares could not happen overnight. How would authorities select those who go and who stays? Who compensates owners for loss of income?

"Like Pandora, the Government cannot get the problems back into the box."

Tyler favours stopping issuing operator licences, and fixing fares, then letting attrition do the rest.

Consumer NZ chief executive Sue Chetwin says there might be an argument for taxi drivers having to offer a standard fare into the city from the airport, so that people are not being ripped off.

"Many major international cities do that so that unsuspecting tourists don't get ripped off by the cabbies waiting outside the terminal," she says.

Business NZ's chief executive and regular cab user, Phil O'Reilly, says he chooses between two taxi companies most of the time. He uses Combined Taxis for the shorter distances and Corporate Cabs to get out to the airport.

"If I want to take a cab with a lesser cab company across a short distance - then I will. "Combined Taxis will tend to be more expensive, but I'm OK with that."

What O'Reilly is concerned about, is the overseas visitors who enter the country. Its confusing for tourists when it's more common around the world for cab fares to be regulated. "In Sydney, taxis tend to charge the same rate. It's the same in New York and in London."

If anything, New Zealand should strive for a taxi system on par with London's, he says. For now, he had grown used to how the fares worked here, but as in any system, there was always need for improvement.


Green Cabs, with about 110 cars, which aims for the eco-friendly.

Kiwi Cabs with 71, at the budget end.

By far the biggest are the 500 blue and white-flagged cars of Combined Taxis.