THE FUTURE OF TRANSPORTATION BY TAXI

by Michel Trudel
Department coordinator
Taxis
Ministère des Transports du Québec
35, rue de Port-Royal Est, 4e étage
Montréal (Québec) H3L 3T1
Tel. (514) 864-1637
Fax (514) 873-0435

Paper given at
the first European conference of the IATR
International Association of Transportation Regulators
Strasbourg, France
October 1996

1.0 INTRODUCTION

It may appear presumptuous to assess the future of the taxi. No one has a crystal ball enabling him to predict the future, particularly in such a specialized field.

However, without attempting to predict the future, we can try to plan for the long term. This will enable us to take stock of the present situation--what is working and what is not--and to anticipate changes in our society and in its needs. What we really need to envision is the best possible regulatory framework to provide the public with automobile transportation that is as adequate, efficient, safe and economical as possible.

Thus, the ideas I would like to share with you are not the prognoses of a futurist. Rather, they are the ideas of one individual who, like many of my colleagues here now, who are in charge of the regulation of the taxi industry, is closely involved in this area of expertise as a regulations analyst and, at the same time, at quite a distance from it, since he is not a member of this transport industry.

My presentation will be divided into five parts:

2.0 THE FUNDAMENTAL OBJECTIVES OF TAXI REGULATIONS

All large cities in the Western world have a long history of regulating transportation by taxi. This heritage is based on certain principles. A review of the literature (1) reveals six fundamental objectives that have traditionally been used to justify interventions by authorities to regulate transportation by taxi, even back in the days of horse-drawn carriages.

In order of importance, these objectives are:

  1. public safety;
  2. consumer protection;
  3. availability of service;
  4. quality of service;
  5. reasonable profitability of service; and
  6. reduction of traffic congestion and pollution.

These objectives are of concern to the general public, to the consumer, and to the taxi operator. We are obliged to recognize, however, that the general public and the consumer take part rarely, if at all, in discussions concerning taxi regulations. Taxi operators do take part, of course, and the fact that they are so strongly represented may explain the abundance of regulatory provisions--some of them rather nit-picking--meant to ensure discipline in the profession.

Nevertheless, the above objectives provide the basis for our interventions--something we may be inclined to forget while busy at work, caught up in the routine of daily management, and face-to-face with the demands made, sometimes vehemently, by representatives of the taxi industry. It is important for those in charge of regulations to keep these fundamental objectives in mind and to use them to gauge the representations and recommendations brought before them.

3.0 THE PRESENT STATE OF TAXI REGULATIONS

Previous IATR conferences have made us aware of new ways of monitoring and regulating taxi transportation without subscribing to annoying regulations that trifle with details. For his part, Ray Mundy is a fervent proponent of issuing taxi permits through a system of franchises that public authorities grant to firms on a contractual basis.

The fact remains that the vast majority of authorities in Western-world countries regulate taxi transportation by traditional means. That is to say, public authorities:

This is the situation for many of us at the present time. In most cases, it has been inherited and we must make the most of it. It is a major challenge to effect fundamental changes in a patchwork system, that is to say, one in which reform after reform has been added onto an established structure. This brings me to consider what is lacking in the present system and in the industry.

4.0 THE DRAWBACKS OF THE CURRENT SYSTEM

4.1 Operating territories must be adapted to urban realities

Determining the boundaries of the territories in which taxis operate is obviously conditioned by the territorial limits of the body that issues the permits. Too often this body is a local municipality whose territory does not correspond to the daily living space of people. In many metropolitan regions, municipal boundaries constitute artificial structural constraints on transportation. In some cases, even regional groupings of municipalities must change to keep up with urban realities.

To these structural difficulties we may add the resistance from the industry, whose members do not want to open up their markets to colleagues in neighbouring areas. In Québec, for example, where the government has the power to change territories so that they adapt to urban growth, resistance comes from operators who jealously guard their exclusive rights to local markets, without realizing that artificial boundaries jeopardize their operations and their future. Territorial divisions that do not correspond to the daily realities of people are an obstacle to the use of taxis and an invitation to flout the limits prescribed by regulation.

The main obstacle faced by regulators who seek to consolidate taxi territories is a concept that provokes a gut reaction in the taxi industry: the market value of the permit. "Why should my permit be lumped together with others that are not worth as much?"

4.2 The market value of taxi permits is not an end in itself

The most decried bias in the regulation of taxi transportation is the market value of permits created by limiting their numbers. This practice is extremely widespread in Western-world cities. It can be explained and justified by the following objectives:

The absence of a regulatory framework can result in a massive influx of new operators; reductions in income, numbers of customers and quality of service; and higher fares. In a context without regulations, the low cost of entry into the market attracts people who have few possibilities for gainful employment: independent taxi operators flood the market and the streets, and quality and reliability of service deteriorate.

However, regulation that limits the number of permits can have insidious effects:

Some argue that the market value of permits viewed as investments has positive effects. They see new permit holders as investors and serious business people with the development and profitability of their business at heart. These people would never risk losing their permit by conducting operations in a way that is contrary to the public interest, since the market value of their permit creates a form of contract between the operator and the permit-issuing body, which can revoke the permit if there is a violation of the regulatory contract.

Be that as it may, the taxi industry must understand that the tail doesn't wag the dog, that the market value of permits is the result of the system, not its purpose. It is hard to accept any objection based on the above argument alone. As for operators, their purpose must be to serve the public. Unfortunately, all too often the industry defends the market value of permits like a hoarded treasure that can only grow larger.

4.3 The business culture of individualism

One of the advantages of the taxi business, often invoked by drivers, is freedom--there is no boss to get on your back. For many independent operators and drivers, this becomes part of their business culture. Such individualism has various effects on the quality of service and the cohesiveness of the taxi industry:

At its worst, absolute individualism is contrary to group solidarity and loyalty. This feeling of freedom has another downside: the tyranny of the trip--a short-term interest indeed. The lack of perspective can be summed up in the motto, "One trip at a time".

4.4 Representations in the form of demands

The taxi industry--especially the individuals who officially speak on its behalf in certain cities--does not always conduct itself like a business partner. Too often its representations before the authorities and before its principal public and private partners take the form of demands for rights and privileges.

The most arrogant statement I ever heard came from a representative of the Québec taxi industry who rose to the defence of present regulations claiming they were "his property".

The industry demonstrates the same behaviour with its clientele as when it demands rights and protects its so-called entitlements before authorities: the market will not change, the customer must take what he can get. Worse yet, the industry resists any new idea that would call its current practices into question.

4.5 The dictatorship of the fare

"One trip at a time." And it is out of the question to vary one bit from the prescribed fare. In our economic system, any business may extend privileges to its best customers, who boost its volume and allow it to make economies of scale. In the taxi industry, however, this would be a sacrilege.

In Québec, it took a court case to confirm that an institution has the right to obtain a lower taxi fare by contract. And yet, a clear statement that it was possible to vary from prescribed fares had been part of the law for nearly 10 years. It seems the industry felt that a departure was acceptable only if it meant a higher fare. And the institution it dragged before the courts was none other than the Société de transport de la Communauté urbaine de Montréal, which, year in year out, purchases nearly five million dollars' worth of taxi services in Montréal. Better means have been found for maintaining good customer relations.

4.6 Resistance to new ideas

The defence of so-called entitlements, a business culture of individualism, the dictatorship of fares and a patchwork system of regulations are the ingredients of a cultural mix that tends to harden and become impervious to new ideas.

5.0 EMERGING ISSUES

5.1 Change in Western society

I would like to venture a rough sketch of what the future holds in store for Western society.

Demographically, the population is aging and more and more people will be joining the ranks of the elderly and living longer lives. This phenomenon will increase the public burden for health care and institutional assistance.

Economically, there will be less and less job security: jobs will be increasingly specialized and ever fewer in number. Thus downsizing will be the order of the day in the economy as a whole and in family budgets.

In urban development, adverse trends will likely continue: functional specialization of space apportioned into commercial, business and residential areas; socioeconomic grouping of residents; increases in the number of automobiles; urban sprawl; etc.

The public bodies that have mortgaged the future during the last few decades through unreserved use of the budgetary item known as "the long-term deficit" will have to rein in their own budgets. Henceforth each expenditure will require full justification.

5.2 The needs of consumers

Consumers have grown more demanding and their needs, more varied. They want more for their money. Their rallying cry is for "availability" and "quality".

The businessman in a hurry to get to the airport, the tourist in no rush to get back home, the mother with her child on the way to the hospital, the convalescent on her way back home, the institution that uses taxis to transport students or the handicapped, all these consumers, with their different needs, demand service that is impeccable and professional.

5.3 The concerns of authorities

The prevailing discourse in public circles calls for reducing regulation, eliminating irritants that impede initiative and entrepreneurship, and lessening the role of the government, especially with regard to the regulation of commercial activities.

Increasingly, authorities are sensitive to the unjustified constraints in regulations, especially to extremely irritating provisions that prevent innovation. Vehicles adapted to the special needs of people in wheelchairs represent a major opportunity for the taxi industry. If it fails to act on its own, authorities will have to take action by issuing additional or special permits.

Another objective being pursued by governments is the liberalization of trade and the elimination of barriers in order to face the challenge of the globalization of markets. There is a movement to eliminate barriers, offer opportunities to entrepreneurs and make way for uniform services worldwide. Even in the area of taxi regulations, these considerations are by no means "political fiction". The extension of the Cabcharge network is a striking example of the business world's need to have ready, standardized access to taxi services. Another example is the limousine service from any airport in the world that airlines are offering to their business class customers.

6.0 RECOMMENDATIONS FOR THE FUTURE

We are just a stone's throw away from the year 2000. What kind of taxi industry do we want people to have in the 21st century?

The assessment I have just made is a grave one. It is not that of a pessimist. If we want change to be positive, we must not be slow to identify what is not working. And to fix it. With this in mind, allow me to suggest future thrusts for the taxi industry and for the regulation of this type of transport.

6.1 For the taxi industry

If it is to provide the variety of services required by the public, the taxi industry must change in a number of ways:

  1. a sense of enterprise and of risk

    Taxi operators must step outside of traditional taxi practices and stop waiting for customers to come to them. They must become specialists of urban transport.

    They must tune in to the needs of their customers and spread the word that they can offer services tailored to the needs of institutional, commercial and individual customers. They must see that their fleet has all types of vehicles required by the public: large-capacity or adapted vehicles; limousines or minibuses, if need be.

    The tyranny of the trip must give way to the dictatorship of the customer.

  2. a sense of public relations

    The taxi industry must get over its addiction to demands as the only form of dialogue with authorities. It must give itself leaders who are capable of listening to partners and engaging in true dialogue.

    The taxi industry must also remember that authorities do not regulate against the industry but for the public. Certain measures may disturb the industry, and, therefore, the body in charge must be able to explain their basis. The industry must also maintain dialogue, even more so in periods of difficulty. Fighting the message by attacking the messenger is not the solution.

  3. a sense of common action

    A business's efforts will be in vain if it sells services that its workers do not want to provide, or if provision of those services varies too much from one driver to another.

    A sense of risk should permeate the group: collective investment is required to develop a business. Such investment may concern advertising or entertainment expenses as much as new vehicles or new technologies.

    Individualism must make way for solidarity. The taxi industry must give its leaders the means to lead.

  4. recognition of the trade

    The industry would like more recognition from the public. Achieving such recognition must begin with the trade itself: a code of ethics, a code of discipline and the application of these codes to activities managed by the industry; training for all drivers, not just those starting out. Recognition of the trade must be based first of all on the pride and loyalty of its members, qualities that must be developed.

    Vocational training is a means of attaining the objectives I have just mentioned. A vocational training and upgrading strategy for taxi drivers could increase individual responsibility, activism and cohesion of members, standardization of services, the collective ability to adapt to needs and new ways of doing things, and public recognition.

    Taxi drivers themselves must underline their public role. While offering a public service, overseen by public authorities, the industry must make itself known as a responsible and active partner in our society, by helping people in distress, informing authorities of emergency situations, acting as a booster for tourism, associating itself with humanitarian causes, etc.

    As citizens, taxi drivers must be exemplary and responsible. They must behave like streetworkers, in the social work sense of the word.

6.2 For regulatory bodies

Authorities must recognize that taxis provide an indispensable public service, and further, that the range of services they offer provide a complement to mass transit and to transport adapted for people with limited mobility.

Authorities must look upon taxi operators as major partners in the transport system, in particular when it comes to developing plans for transportation, reserved lanes for public vehicles, or traffic regulations. Such consideration on the part of public administrators is vital if taxi operators are not to be condemned to acting through protest.

Many of us have inherited a patchwork system of regulations. The system is not without basis, or bias.

Regulation must break free from provisions that are nit-picking, incidental or out-of-date and focus on what is essential. It must return to the fundamental objectives and stick to them.

Limiting the number of taxis is not an end in itself. It is a simple means of attaining short-term objectives related to availability, profitability and quality of service. It is to be used, if necessary, and provided all needs are met, in conjunction with other, more fundamental measures, such as vocational training and opening up to new markets.

If the taxi industry is to have a future, it must adapt its transport services to the needs of a variety of clienteles. Nature abhors a vacuum, and if taxis do not fill the void, others will. There is a strong possibility that this will be the case with adapted vehicles.

If taxis fail to take the initiative on their market, regulation must supply the fresh air for adapting to new realities. Suitable measures could provide for services offered by contract, variance from prescribed fares and, if need be, the issuing of new permits.

Authorities in charge of regulation must maintain dialogue with representatives of the industry, all the while keeping their distance to avoid the risks of collusion and accommodation.

We must recognize that the system of regulations that governs the taxi industry is an artificial and fragile structure relied on by many workers; reforms must be carried out carefully, for the measures we adopt today will have repercussions far into the future.

7.0 CONCLUSION

I would like to bring these reflections to a close by quoting the words of Bob Dylan, "The times they are a-changin'". This should be our rallying cry.

We must realize that the world does not revolve around the taxi industry. As the times change, so must the taxi industry. And so must taxi regulations.

Thank you for your attention.

___________________________________________

(1) Trudel, Michel, The Fundamentals of Taxi Regulation and the Quebec Experience, Paper presented to the 7th Congress of the European Taxi Confederation, Donostia - San Sebastian, Spain, February 1995, 24 pages.

Note: The opinions expressed in this article are those of the author and do not necessarily reflect those of the ministère des Transports du Québec.


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