Note: The following investigative journalism appeared recently in the Bermuda Sun. The author, Bryant Trew, maintains a web site which includes the following and a number of other perceptive opinions. His web site URL is:

207.158.220.41/


The Bermuda Sun
(Bermuda)
20 February 2002

The mess they’re in

A mix of ministerial misjudgement and inertia within the taxi industry
paved the way to the current impasse

By Bryant Trew
Part 1 of 2

When I was first asked to look into the taxi industry, there were few clues that it would prove to be the most mind-numbing subject for me to write about to date. And this isn’t because the subject is emotional or distressing, but rather because the industry is in such an absolute mess. Sorry if I offend anyone, but after talking to taxi drivers, dispatchers, owners, officers and the Minister of Transport, describing the industry as a total mess is the only way I can put it.

A taxi is a public service vehicle carrying the same responsibilities of any other vehicle assigned to provide public transport. But, there are key differences — for example:

  • Taxi owners purchase their taxi licence and vehicle – bus and ferry drivers do not. Currently taxis are on the market for approximately $120,000. This is normally the price when the taxi itself is in need of serious repair or replacement. So essentially, any person looking to come into the industry will need anywhere from $120,000 to $150,000 to get started.

  • Taxi drivers are not salaried by any organization: This means that their income is determined by current market conditions. Like any other business connected to our travel industry, when travel to Bermuda is booming, taxis do extremely well. But, when travel to Bermuda is dismal, taxis do extremely poorly. Bus and ferry drivers get paid whether the bus or ferry is full or empty throughout all seasons of the year.

  • Taxi drivers are individual entrepreneurs. While they do get breaks on duty for vehicle purchases, and pay a significantly low annual vehicle licence fee, they do pay the full rate for fuel, spare parts, repairs, maintenance, and so on, like any other private individual. Bus and ferry drivers are employees, and therefore bear no cost for the vehicles they drive. Further, vehicles and parts for busses and ferries escape customs duty and repairs and maintenance is carried out by Government workers instead of a private business that charges a premium on repairs to make a profit.

  • Taxi drivers do not have an official body of representation, such as the Public Transportation Board. To clarify, dispatch companies do not run the taxi business. Instead they provided a legislated dispatching service to taxi owners/drivers.

    So, while it is tempting to look at a taxi in the same way that you might look at a bus or a ferry, the two are not the same, and understanding the differences between them is critical for any person to fully appreciate the conflicts that arise between the requirement to provide service and the requirement to make a living.

    It is well-known that taxi owners are often at odds with the Ministry of Transport.

    From my discussions with all parties concerned, I have formed this impression: Drivers perceive that the Minister of Transport is ignorantly dictating to the industry and they allege that by pushing for a central dispatch GPS he is doing a favour for the BIU. Dr. Brown, meanwhile, perceives that the industry has fallen behind the times and is lacking in progressive thinking. The truth, inevitably, lies somewhere in the middle.

    When I met with the Ministry of Transport it was very clear that there was great frustration with the lack of cohesiveness in the taxi industry. However, while the Ministry expressed a strong desire to improve the taxi service, I was hard pressed to pinpoint exactly how they will go about doing it.

    Going back as far as March 27, 2000, I could see that the Minister had a goal to implement a central dispatch system (GPS is mentioned specifically in a letter from the BIU, obtained independently by the Bermuda Sun and dated September 11, 2000). While there is nothing wrong with the Minister aggressively tackling the island’s transport issues, the key question is ‘what steps did the Ministry take to make improvements before it felt that it had to force central dispatch GPS on the industry?’

    Dispatchers and drivers say all communications with the Ministry have been on the basis of setting up a central dispatch GPS system. I wasn’t absolutely sure about this point after my meeting with the Minister, so I sent him a set of key follow-up questions.

    Alas, the Ministry advised that after having already given me a two-hour interview, and with their current pressure with the budget, fast ferries, and so on, that they would not be able to respond to my additional questions any time soon. So all I can say is that I’ve seen no evidence that the Ministry made significant attempts to work with industry players, before forcing the new system on them.

    AS mentioned earlier, the industry claims that the Minister introduced GPS as a favour for the BIU. Where did these allegations come from? Well, four things happened in 2000 that fuelled this perception:

    Dr. Brown wrote, in the letter referred to above: “The Ministry of Transport cannot appoint the BIU or any other organization as the sole voice of the taxi industry. That is a matter better left to the BIU and the taxi owners/drivers. The Ministry of Transport, as a matter of policy, is prepared to recognize the Bermuda Industrial Union as the umbrella organization, which will represent the taxi industry in Bermuda.”

    I would imagine that most people would deduce that the above amounts to the Ministry setting the BIU up into a very comfortable position… a monopoly in fact, that would be guaranteed all dispatching fee revenues, regardless of the level of business generated in the industry.

    When you look at how drivers operate independently, it is of no surprise that they rejected the idea of the union being given so much power over their livelihood. Further, while it may be true that the Minister is seeking creative ways to avoid a monopoly at the present, it’s quite obvious that rumours today are based on past attempts to do just that.

    But this is perception, and perception isn’t always the truth. I asked the Minister about why he disbanded the Taxi Advisory Committee, and his position is that after so many years, it seemed the the committee was not very effective in coming up with solutions. He told me: “I reviewed the minutes of their meetings and decided that I could get my advice from other sources.”

    In regards to the appearance that the Co-op/BIU was to replace the Advisory Committee, it was explained the Co-op/BIU appointment was not a replacement. It was also explained to me that Government’s attempt to work with the BIU/Co-op was solely because there was a genuine need to galvanize the industry. Further, the BIU/Co-op were chosen to lead the Central Dispatching Company because they had the desire and the means to implement and finance the new GPS service.

    Normally I would suggest that the Minister must take us all for fools to have us think that the appointment of the BIU as the sole voice/umbrella organization of the taxi industry is completely independent of the BIU getting Government backing on central dispatching. But there is something that casts light on this: His May 11, 2000 letter continues:

    ‘This recognition shall be subject to review on a yearly basis taking into consideration the overall effectiveness of the BIU in addressing and resolving a number of issues facing the Taxi Industry. In addition, this offer of recognition shall be null and void if it contravenes or conflicts with any provision of law.’

    It is here that the Minister makes it utterly clear that the recognition of the BIU was entirely dependent on their ability to push the industry forward in a progressive manner. In my mind this could eliminate the notion that the two are connected. Despite the Minister’s good intention, I’d have to conclude that this was not the best idea. Why? Because it would be so easy to perceive such action as unseemly, or even unethical. Doing such a thing would have a group that was financially biased representing the interests of all taxi owners. Considering that taxi owners and the dispatching company have a buyer/seller relationship, there is certainly a conflict of interest in the relationship. I would sum it up as a bad decision that blew up in the Minister’s face.

    So what of the Minister’s perception of the taxi industry? I’ve heard rather frank comments about his opinions on the industry, and I can certainly relate to his frustration. First of all, it is obvious that there needs to be improvement in the taxi service, and it is blatantly obvious that the Minister is dead serious about implementing GPS. But what has the taxi industry done over the last two years? So far I’ve found nothing that shows an industry-level attempt to look at the major problems in the industry. I’ve not heard or read about any kind of industry summit, forum or scheduled meetings. I’ve not heard or read about any attempts to set up a taxi authority to conduct research on the industry, and most importantly, the industry has not come up with a plan of its own to adequately and progressively manage their business. Many drivers agree that the high level of fragmentation is hurting the business, but too few drivers are coming forward to lead the industry towards improvement.

    Sadly, the industry’s response to the Minister has been a combination of hurt, anger and frustration. All three of these things are part of human nature, but strikes, go-slows and boycotts are not the answer.

    Rather than wasting time calling for the Minister’s resignation, the industry should be calling for an end to divisiveness and a demand for focus on solutions. If the taxi industry does not come together and stand up for itself, then who else is going to step in and do something about it?

    If the industry was proactive, they wouldn’t be trying to battle the Minister (regardless of how correct or flawed his ideas might be). Instead, with organization, the industry would be better positioned to create and implement solutions that do not require government intervention. And by extension, with a strategic foundation, they would be able to present cases to the Ministry to obtain support where it is needed.

    In part two on Friday – Making a bad situation even worse.


    The Bermuda Sun
    (Bermuda)
    1 March 2002

    Where are the facts?

    By Bryant Trew
    Part 2 of 2

    The central dispatch GPS system should be looked at as a business. After all, Transport Minister Dr. Ewart Brown is aiming to legislate the use of the service to all taxi owners, which basically means that taxi owners have no choice in the matter.

    The first lesson in business is to conduct an industry analysis for the market you intend to enter and I was surprised, on approaching the Ministry, to discover that no industry analysis had been done at all.

    The Ministry says it is not in possession of any statistical data on the taxi industry, and was therefore able only to guess and make assumptions in response to questions I put to them. So we don’t know growth trends in the size, demand or profitability of the industry. We don’t know average jobs, average fares, average income, average hours, types of failure rates, or anything of that sort. Besides knowing the exact number of taxi owners (541) the Ministry has not obtained any other factual data. That’s it – nada – nothing.

    So we have an industry in a free market society that the Government has chosen to interfere with, without having done any industry research at all. There is no scientific justification for anyone to make any decisions on the taxi industry at this time. Of course, there are some things that don’t need to be validated with research; however, I suggest that what is being planned for the taxi industry is not one of those things. It is all too easy to say that there are problems with the taxi industry, but improving the situation requires you to understand the nature of the problems.

    Imagine for a second that you turned up to Dr. Brown’s medical practice and you tell him that you don’t feel very well. Just after you state this, Dr. Brown immediately whips out a needle and injects you with antibiotics. Now this is before he asks you what hurts, checks your pulse, listens to your heart, looks at your eyes, ears, tongue, runs a blood test, and so on. All he says is, “I just gave you this, because I know someone who looks just like you who used antibiotics.”

    Wouldn’t you be a little frightened about a doctor who prescribes a treatment before examining you? What good are antibiotics if I have a sprained ankle? Not much good at all — and this is the situation we have with central dispatch GPS. We know that there is a problem, but if we fail to determine the nature of the problem then we run the risk of incurring an expense (a great one at that) for a solution that does not address the problem.

    To my great disappointment my research has led me to believe that taxi drivers aren’t the only ones at fault for the mess of the industry – the Government has done its part to flush service down the toilet as well:

    So what right does Government have to condemn the taxi industry for not doing its duty, when Government hasn’t done its duty? As if this isn’t bad enough, taxi owners still do not have final figures on how much the system will cost to be installed or how much more the service will cost per month. So how can the Minister go to Cabinet to propose a solution when the business model for the solution is not complete or hasn’t yet been made public?

    I don’t raise these issues to point fingers, but instead to reinforce a simple point: If we are going to fix the taxi industry, then we all need to play our roles and carry out our responsibilities. This applies to taxi owners, drivers and dispatchers, as well as the Government and hoteliers. It will require everyone to be progressive and short of that there is little GPS will be able to fix.

    So what of central dispatch GPS? Firstly, although the two are talked about together, they aren’t exactly joined at the hip. Central dispatching (the idea - not the company) is simply the centralizing of dispatching on the island. That is, instead of having multiple companies offering dispatch service, you only have one. Central dispatching is a no-brainer, but it’s just the start of cleaning up our act. Incredibly, hotel occupancy levels, daily departure levels and airport arrival numbers for tourists are not consistently (or at all) shared with dispatch companies. So how we are supposed to best serve our guests when we do not exchange data in order to manage their travel needs properly? Bermuda also needs an official customer service line, so that clients can report drivers who fail to pick them up (and other complaints) for scheduled trips (which should lead to a fine). Notice that issues like this have nothing to do with GPS technology.

    While I fully support central dispatching, the addition of GPS technology is another matter. The primary purpose of using this technology is for a taxi company to locate and dispatch the vehicle closest to the client, thereby beating a competing taxi company to a fare. This is especially helpful in more remote areas where demand for taxis, and, correspondingly, their availability, is relatively low. But hold that thought for a second: We have 600 taxis on our roads, giving us an average of 28.5 taxis per mile. Even if only 400 were on the road at any one time, that’s 19 taxis per mile. If you can’t get a taxi in 15 minutes in an area where there is an average of 28.5 taxis per mile, your problem is not the ability to locate the nearest taxi, but rather whether or not all those taxis are on the road at all… With Bermuda’s numbers, a taxi should be on every corner — if managed correctly.

    Numbers like these make the concept of GPS laughable, because it should be blatantly obvious that the taxi industry needs serious study of its availability problems. We can’t back GPS just because radio technology is decades old (if it efficiently does the job required, why change it?). We should back GPS only when we are certain that it is the best tool to address our problems. And not every modern city uses GPS. Some still use radios, some use cellphones and others hardly need any type of communications device, because the taxi availability and demand is so high.

    Another consideration… Let’s say that in a country as small as Bermuda GPS was to miraculously reduce the average wait for a taxi by five minutes. Does it really make sense to spend millions of dollars in equipment, and raise yearly dispatching costs by 50 per cent in order to shorten the wait by five minutes? I think not.

    But who truly knows what’s best for Bermuda? For all we know, GPS could be the very best thing for the industry. And let’s not forget that almost all of the financial risk for Government’s decision is being placed on the taxi owners’ shoulders.

    Here’s what I see as the critical issues:

    My conclusions? Firstly, the taxi industry needs to organize itself immediately, and thereby stop being so self-defeating (This is the Minister’s greatest complaint, and I totally agree with him on this). The first step to a recovery is to understand and manage its own business. I’d start by establishing a Taxi Authority, with owner-elected executive representation (unlike a Government committee with individuals handpicked by the Minister). These leaders of the industry would be responsible for leading the charge on research, planning and also provide direct representation to the Ministry of Transport.

    Secondly, but equally important, while Dr. Brown deserves credit for raising the heat on the issue, he needs to stop and commission an industry analysis before he can determine what solution is best. The taxi industry is facing major issues which need to be addressed. If Government proceeds to implement a system that does not address these major issues, all it may succeed at doing is driving costs up and making a bad situation even worse. Additionally, after having read a file on the Taxi Commission, I am bewildered as to why the Minister disbanded the Board, effectively cutting himself off from the owners. Communication with the industry needs to be reestablished; therefore, I’d suggest a board with taxi owners, dispatch companies and representation from the Bermuda Hotel Association et al.

    Yes, it’s time to manage, research and report on where the industry has been, where it is and where it needs to go. Every party involved needs to put their own ego in check and come together to deliver solutions that will address the industry’s real problems.


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