Race to the Bottom

(Original edit of article for Taxi magazine)

We keep hearing calls to make taxi fares cheaper in order to compete with private hire.  This is not just from the public, but from those within our own ranks.  Is this a good idea, or is it just giving in to the race to the bottom?

Of course, we couldn’t bring fares down even if we wanted to:  they are fixed every year and we cannot change that.  However, many of us are on radio circuits or use apps to find work, and we’re often encouraged to accept cut-price work.  Indeed, I’ve seen cabs driving around announcing themselves as “Fixed Price Black Cabs.”  Sometimes discounted fares are worth doing, sometimes they’re not.  This year I’ve given big discounts on street jobs to Luton and Stansted airports, and have instantly turned a bad day into a good day without missing the “lost” money.  If things are quiet I’m happy to accept fixed price account jobs from the City to Paddington for £20, even though the meter is likely to read £25.  The last time I went to City Airport from EC4 the meter said £49.  I’d already accepted the fixed price of £33, and the deal isn’t so good in this case, particularly as it’s a long and tortuous drive back to Central London.  It’s still worth doing on a slow day though.

The argument sometimes used when suggesting a lowering of fares is that many goods and services have gone down in price due to technological progress and the global economy.  True, electrical goods and clothes can be produced cheaper than they used to be, but the service taxi drivers provide hasn’t become easier to produce.  Technology has made it easier for us to find work, but it hasn’t made the driving any easier.  The main factor making our job harder is an increase in traffic and a reduction in road space.  This also works against us by putting potential customers off.

The expensive vehicle that we drive is unlikely to become cheaper, and running costs are rising all the time.  Diesel is artificially expensive due to taxes.  Fuel prices were lower in the New Year, but they’re creeping up again.  We might enjoy some fuel savings when we all go electric, but that seems a few years’ away, and I’ll believe it when I see it (if we ever switch to electric, the government will claw back the lost diesel revenue somehow, don’t worry about that).

Public transport providers cause outrage every year when they raise their fares.  They‘d say they can’t run their services on less money.  Neither can we.  Only selected goods and services have gone down in price: I’ve seen no reduction in my gas, electricity, water and council tax.  It’s still a major outlay when I need to visit the dentist, optician or vet.  Should I ever find myself on a serious charge at the Bailey I’d be surprised if I found lawyers had lowered their fees in order to compete with each other.

The minis have held demonstrations this year.  It’s bad that Uber have lowered their fares and are charging their drivers more commission, but it’s not altogether unexpected.  Customers are drawn in with loss-leading fares, then become liable to surge pricing at a later date. Their drivers are similarly ripped off.  If private hire drivers are prepared to drive to Gatwick for £50 they can’t be making much money.

Private hire can offer even lower fares because they don’t have our overheads.  Traditional private hire can take work from us as they are more likely to guarantee a price.  Private hire fares are low because of worker exploitation.  Uber and Addison Lee have reduced their fares, and should their drivers complain they are shown the door. There’s a revolving door of new drivers from home and abroad, lured in by promises of streets paved with gold.

Those with a conscience appreciate the human element in transportation and sympathise with the plight of the exploited.  You can’t make a taxi or private hire service cheaper without making things worse for the driver.  Private hire and taxi demos remind the public that cheap transport comes at a cost:  namely disgruntled, overworked drivers.  A tired driver is potentially a dangerous driver.  Many people just want to get from A to B as cheaply as possible, but they need to be reminded that many drivers are close to poverty and need to top up their income with benefits.  This is encouraged by a fat cat company that pays most of its tax abroad.  Big companies compete by exploiting the global economy.  Toiling in a third world sweatshop is little different from sweating in the driver’s seat in a Prius in the backstreets of London.

We can’t compete with private hire on price, only quality of service.  The price differential reflects the investment our drivers have put in to gain their badges, the stricter regulations, and the higher running costs of our vehicles.

I accept discounted fares if they suit me at that particular time, but I won’t be pressing for a fare reduction:  our fares have stagnated while public transport fares have risen.  The taxi remains the most expensive road transport option – after pedicabs.  To justify this, we need to make sure we provide a premium service.  We need to ensure we are presentable and helpful.  Over the summer work levels have increased.  I hope this doesn’t lead to more job refusals.  Scruffy, unhelpful drivers, refusing to go south is an image we earned through complacency when things were better.  We can’t ever become complacent again.  Let’s work to maintain the gold standard.  Private hire are eating each other in a race to bottom.  Let’s not join their race.

Copyright:  Chris Ackrill, 2016.

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