What Are You Really Protesting, Exactly?

So Comfort wants to increase cab fares from next week, which has drawn the usual howls of protest from various quarters. But do those protesting really understand what they’re protesting?

1. How dare you not consult us before increasing fares?

Consultation sounds nice in theory, and it works for areas where public or industry feedback is useful, such as new proposed legislation or amendments to existing laws. But when it comes to price-related issues, does it have a place at all?

Do you honestly expect any end-user to agree that prices should go up? If all that consultation will create is negative feedback, what is the point? It’ll be a waste of time for both companies and consumers.

More importantly, in a market economy, companies do not “consult” customers on price increases. Your chicken rice hawker does not consult you when he decides to raise his prices, does he? Neither does your mobile operator, or your school textbook seller, or any other service provider for that matter. Why do you expect taxi companies to consult you? What’s so special about taxi companies that you think they should consult you?

2. You should increase capacity before increasing fares.

This is so hilarious it would be funny if it didn’t come from an NCMP backed by a 15-man choir. First, as a profit-seeking company, do you not think that Comfort would want to increase revenue-earning capacity if it could? Is it possible that they don’t have enough taxis and drivers to begin with?

Second, who controls capacity? Is it the Govt, through the COE system, or is it Comfort? If the former, why wait till now before raising such an issue? She (or Mr Chiam before her) could have made this point long ago.

3. Comfort should charge less for rentals, make less profit, etc instead of increasing fares if it really wants to help taxi drivers take home more.

I haven’t heard anyone say that Apple should charge less for its iMacs/iPads/iPhones or even that Singtel/M1/Starhub should charge less. Yet you want Comfort to earn less, so that it can give more away to taxi drivers.

Well, Comfort is not a charity. They are not in business to earn less. Frankly, they will and they should try to earn as much as possible given the constraints of competition, else they should not be run as profit-oriented companies.

So are you asking for Comfort, and other taxi companies in general, to be constituted as non-profit organisations? Or are you asking Comfort, and other taxi companies, to see their “social” mission and not satisfy their shareholders’ demands for higher earnings and dividends each year?

Or perhaps you’re asking the Govt to control how much profit-oriented companies should earn?

Do any of the above make sense to you, if you are the owner/director/shareholder of a taxi company? If that makes sense to you, why don’t you tell car dealers to cut their profit margins so that car salesmen can take home more? Or why not ask property developers to earn less so that their builders, subcontractors and even their property agents can earn more?

4. National Taxi Association engaged in price-fixing behaviour, why is CCS not taking action?

First, I don’t think NTA has engaged in price-fixing behaviour, despite its “urging” other taxi companies to follow suit. Why? Because clearly, no one else has yet matched taxi prices from Comfort, and it is not clear that they will.

Second, CCS has taken action. From CCS’ past enforcement actions, it should be clear by now that actual price fixing has to occur before CCS imposes fines. Nevertheless, CCS has warned NTA not to engage in actions that could lead to price fixing. And that’s about all it can do at this stage, until evidence can be obtained showing price collusion.

Third, and most important– even if all taxi company prices are raised to exactly the same level as Comfort, can anyone prove that is a result of price-fixing? That’s the difficult question constantly facing CCS. If it were so easy, then all petrol companies would be in trouble already.

5. Why is the Govt not doing anything about this?

Do you understand that taxi fares are now deregulated? Do you know what that means?

It means taxi companies can set whatever fares they want, and the Govt cannot interfere.

Of course, we know the Singapore Govt is powerful and can get local companies to do pretty much whatever it wants, but what is the point of “deregulation” if the Govt still tries to control fares?

So when you ask why the Govt is not doing anything, are you asking the Govt to reverse its policy of deregulation? Do you want the Govt to regulate taxi fares? Do you even know why taxi fares were deregulated in the first place?

Note: I’m not pooh-poohing the idea of taxi fare regulation per se. In fact, I think regulatory oversight on taxi fares in an oligopoly situation deserves study. But those who criticise the Govt for not doing anything need to understand why the Govt is currently not doing anything, they have to understand why fares were deregulated in the first place, and they have to be clear what they’re asking for.

6. This is some PAP/Temasek/NTUC plot to bleed the people dry

This is an unfortunate consequence of Singapore Inc.

Nobody smells a conspiracy theory when Apple raises prices for its computers/mobile phones, when Nikon/Canon/etc raise prices for cameras/printers, or airline companies raise airfares, etc.

But whenever any GLC raises prices– it’s always a Govt plot, at least in the eyes of some “opposition” politicians.

Is it remotely possible that what the Govt says is true– that it does not interfere in the commercial decisions of GLC’s.

Is it remotely possible that this Govt is not stupid, ie that it knows that every price increase by GLC’s can potentially cost it votes.

Put the two together, is it remotely plausible that the Govt is out to lose as many votes as possible by getting its GLCs to bleed Singaporeans dry? Or is it more likely that Comfort arrived at its decision to raise fares on an independent basis, which it felt was necessary to keep abreast of the huge increases in diesel prices since 2007 (when fares were last increased) and to enable taxi drivers’ take-home pay to match the huge price inflation of the last five years?

No doubt Comfort directors and management may have sought the Govt’s “blessing” before making their announcement, but which scenario is more likely? The Govt ordering Comfort to bleed people dry, or Comfort asking for the Govt’s tacit “permission” to raise fares due to the economic circumstances?

7. What about the needy, the pregnant, the disabled, etc? Higher taxi fares will hurt them!

Much as I sympathise with the needy, taxi companies are not charities. You should take your feedback to the Govt to ask how they can help such groups. I fail to see its relevance as a response to Comfort.

Taken to its logical conclusion, your criticism means fares should either never be increased, or taxi companies should provide substantial discounts off normal fares to such passengers.

Is that what you’re really asking for? Is that really practical? Do you think a taxi driver will want to continue in his profession if fares can never be increased despite inflation? Would a taxi driver ever want to pick up a disabled, pregnant or elderly needy passenger if he has to give a 50% discount from the metered fare compared to picking up a normal passenger? Would you?

Do you understand what you’re really protesting?

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About politicalwritings

Someone who sees beyond PAP and "opposition" in Singapore politics. To understand more please see the Top 10 link below.
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24 Responses to What Are You Really Protesting, Exactly?

  1. Jon says:

    Great points.

    Would have loved to see you elaborate more on what you think on whether taxis should have been dergulated in the first place.

    Would also love to hear your thoughts on the regulated public transport.

    • Thanks. Will share my thoughts another time. Suffice it to say that deregulation works best when there is sufficient competition, eg airlines. If all prices from all service providers are identical, there would be legitimate questions on whether there is any price competition at all.

  2. fatyandao says:

    isn’t it obvious that it’s a protest against a price hike when the local economic outlook is uncertain?

    • Thanks. If only it were so simple. Why do those protesting drag in politics, conspiracy theories, etc if it was just a price protest? In other countries people organize boycotts, ask people to switch brands, write to the companies concerned, etc.

  3. fatyandao says:

    Because they can’t. They come up instead with excuses to go around it, and you shot these excuses down in your blog post.

  4. S says:

    So what are YOUR views on the price hike? You’ve shot down the more ridiculous reasons against price hike. But it doesn’t mean that you agree that comfort should increase fares. Of course it all makes sense from the company’s stand. But I’m sure you also know that the people you’re trying to address (or help to understand what is it they are really protesting) are regular people who wouldn’t be bothered to read even the first 2 paragraphs of your article and who don’t know about deregulation and price-fixing, etc. I find it strange that you are using such difficult terms for a piece directed to those who don’t understand the reasons for the price hike. How useful is this article? How does it help to change our minds? How many people who initially thought all the points you’ve listed, now nod in agreement? Do you think your article served its purpose? And who are you REALLY writing for?
    If it’s just to satisfy yourself, great job.

    • I didn’t know my first two paras were so heavy. There’s no economics jargon or deep stuff in there.

      As far as my views on price increases are concerned, I do not like to use moralistic judgemental words such as “should”. Who is to say when prices “should” be increased? Whose criteria shall we use? Yours? Mine? CASE’s? Can the criteria be agreed by all stakeholders? I think it is obvious “should” or “should not” leads us nowehere.

      Price increases and decreases are part of the mechanism of a market economy. When demand goes up, prices go up. When demand comes down, prices come down. That’s why we have discounts and sales promotions in the retail market, that’s why we have price bubbles, crashes and corrections in the property market. Demand and supply.

      Deregulation works in markets where suppliers can compete effectively to offer a range of prices for a range of services at different levels. Eg in mobile services, operators can offer different speeds, different quality of service, different amount of free bandwidth/talktime, etc at different prices. This provides genuine competition and allows customers to choose the best service at the price they want to pay to suit their needs.

      Does deregulation work for taxi services? Despite the attempts at differentiation (eg maxicabs, limocabs, premium taxi services), the overwhelming majority of services are undifferentiated point-to-point services. This makes taxi service a commodity and thus by the law of one price, they must eventually converge to the same price. That’s what we see in the petrol market, that’s what we see in the taxi market. Now that Comfort has raised its prices, it will be a matter of time before other operators raise their fares or Comfort lowers its fares. Chances are, the former will prevail.

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  6. leebutnotky says:

    Sure you can raise all these points to defend this ‘privatised’ company. But Comfort is not providing luxury items to consumers. We can afford not to buy a Ferragamo bag or holiday
    abroad if these prices are raised, but can you say we would never take a cab, not when bus
    and MRT services suck presently? Especially so for the handicapped and the old.
    Comfort should understand they are also providing a PUBLIC service. As much as they need to
    answer to its shareholders, they also need to understand their soccial responsibilites.
    Despite the hugh increase in profits in the last return, using their domineering position to increase fares at the pretext of giving its drivers a higher income when it is can actually spread some of these profits by reducing rental, tells me this company has lost all its moral principles

    • Thanks for comments. I’m not defending any company, I’m just pointing out the fallacies in the present arguments advanced by various complainants.

      You can talk about taxi companies’ moral or social responsibility all you want. Let’s see how far you get with them.

      PS Taxi service is not a PUBLIC service, unlike what some people think. Just because the target customers are the general public does not make it a public service. Otherwise, every hawker will be considered to be providing a public service, as would every mobile operator, every newspaper, etc.

  7. Godwin says:

    “… this company has lost all its moral principles”

    LOL. I didn’t realise Comfort Taxi was anyone’s role-model for moral principles.

    Unfortunately, I doubt leebutnotky’s moral convictions are strong enough for him to start a cab company that charges less than Comfort as a “PUBLIC service”, with special discounts “for the handicapped and the old”, so we are stuck with companies that are out to make as much money as they can without breaking the law.

    This is business, not politics – you vote with your money, not your mouth. Don’t like? boycott Comfort. I for one will not call a cab from them after 8pm.

  8. Ryan says:

    Oh for the love of God.

    The price fare hikes are coming from a company providing a public service. It’s entirely different from chicken rice. Did the crisis in Argentina escape you? Certain services, when privatized, come with public responsibility. That’s WHY SMRT gets fined for delays. Would the government fine a hawker whose chicken rice sucks? No. Would they fine a transport company that affects business? They better.

    Secondly, you’ve obviously never driven a cab in your life. Comfort makes money off cab rentals, NOT off the fares. They are intending to use the fare hikes to justify increases in daily cab rentals, or a drop in diesel rebates. In fact, they’ve already announced the possibility.

    Third, if frigging modelling agencies get fined for trying to peg a price, who should the cab companies escape that? If DHL, UPS, and Fedex got together and agreed on a standard rate, their CEOs would need hired help to extract the number of lawsuits crammed up their posteriors.

    Finally, the REQUIREMENT for a license to run a cab company is that the relevant authorities are consulted.Otherwise, we wouldn’t have given them one. Do you seriously think there aren’t a dozen people out there who realize they can easily undercut the cab companies? Like medicine, providing transport is a public service.

    I suggest you pull whatever crawled up your ass and died, and check that your brain is working before putting your mouth in gear.

    • Thanks for comments, if rather rude. I shall try not to be rude in my reply.

      1. You are completely wrong. Taxi service is not a “public” service. I shall explain in my next posting.

      2. I doubt you’ve driven a cab in your life either. However, given what you’ve just said, would you agree that the fare increases go to the taxi drivers rather than the company?

      3. I doubt you’ve been an economist or antitrust regulator. You obviously do not understand the law of one price or how commodity pricing converges in a transparent market.

      4. You have no idea what is meant by deregulation. Guess you’ve not been a govt official either. Here’s a clue: airfares were deregulated long ago. That’s why airlines don’t have to ask anyone’s permission to up or down their prices. Even the KL-Singapore route was deregulated a few years ago. Oh– Medicine is not a public service, unless you’re working in a public hospital or polyclinic.

      I suggest you understand the world better before you write crap.

  9. Simon Says says:

    Let’s face it. “Artificial demand” & “Supply” can be manipulated. And we’ve seen so many times on this island. The recent being HDB.
    It still doesn’t get to the core of the problems. On a Taxi ratios : Per Passengers, you can easily see HKG has the best, and most efficient & effective outcome in terms of meeting demand and service standards to a very high satisfactory level. Yet it’s been able to do so without all these “hidden” & unnecessary surcharges to confiscate the issue. Instead of asking and studying why HKG is able to do so and SG is not, people start grasping all sorts of bad reasons (rationally or emotionally) to fight against it and build their case. Not all are unwarranted. It will be too easy to let the Taxi Companies off the hook over and again.

    • Thanks. Are you proposing to re-regulate taxi fares? If so, please state this up front.

      If not, then there’s nothing much anyone can do, unless we have companies which want to disrupt the market with a new business model, as AirAsia did.

      • andre says:

        It’s not a question of regulate/re-regulate vs deregulate. But how the regulation was done. The current situation now is that taxi industry is ‘deregulated’, but yet, there’s some control in place, e.g. no private taxi ownership.
        By limiting the industry to a few corporate companies and especially with a dominant player in the market, that’s where ‘artificial’ becomes the question.

      • Thanks for comments. But there are some old-timers who own their own taxis, these are the guys who have black yellow-tops.

        Notwithstanding the above, I don’t see what difference private ownership makes. They will have to take their price from the market leader, who will be a corporate.

        In most countries, taxis are run by companies, so I think the operating model is sound. It’s got to be corporatized because taxis need to be supported by a call centre infrastructure, they need to run multiple shifts to provide 24h coverage, etc. Frankly, I’d say our private taxi owners are an anomaly.

        Actually, our taxi fares are pretty low by global standards, and definitely very low when weighted by GDP per capita. If you’ve been t New York, London, Paris, Tokyo or even Melbourne, you’ll know $50 or even $100 taxi rides are not uncommon.

        The issues our passengers face, such as availability of taxis, are not caused by the operating model (ie of having several taxi companies with deregulated fares) but by Singapore’s circumstances. Because cars are so expensive, taxis are seen as a necessary complement to public transport, and thus demand for them far outstrips supply. This is not the case in countries with $100 taxi rides, as people do not use taxis unless absolutely necessary, due to the high fares.

        To add insult to injury, the govt controls the taxi supply thru the Coe system. Further, the low fares in Singapore mean that taxi drivers earn only a pittance. Hence, even if taxi Coe’s were doubled or tripled, it is doubtful whether there would be enough taxi drivers to take them all.

        In other words, we have a structural problem that causes demand to far exceed supply, and because of this, the taxi companies know that they don’t really have to live up to very high standards to make money.

        Is there anything you can do to make this situation better?

  10. Very well written and argued point by point. It is a sad and painful situation. Like you say taxi companies are not charity. It really got nothing to do with govt directly. But I would say the COE policy is partly to blame. It is going to lead to spiral effects of other increases like hawkers, school bus, coffee, drinks, barber, fish, vegetable etc etc inflation will go up but our pay remains stagnant!

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  12. Musing says:

    All well and good on the points above. I have no issue with general price increase regardless which aspects or businesses but come on, Singapore taxi has one of the most complex fare. People argued that amongst developed countries, Singapore has the cheapest fare. However, one thing to observe is this.

    In Australia while their train system is almost undesirable, having waiting time as long as 20mins at times, yet it is important to note that most of the general population owns a car. Throw in a higher income earning compared to singapore, hence, taxi in itself is a “luxury” that allows the rip off price.

    Next, Japan. Japan taxi (can only say for tokyo since that’s the only one I am familiar with) is expensive but however again, taxi in itself is a luxury because they have one of the world’s most efficient train system network and buses are pretty decent with wide coverage too. Hence while living there, taxi is again another form of “luxury” option for transport hence justifying the higher cost.

    Next, HK, one of my fav cosmo city, even more than my birth city state Sg. HK taxi is comparable if not felt cheaper than SG taxi on the whole, prob partly due to strength of sg $. However, the point is again HK itself has a fantastic network and excellent service in train network. Coupled with excellent bus and mini bus which provides swift cheap rides, taxis again is another form of “luxury” mode of transport though the low pricing of it makes it more common alternative when press for time or feeling “lazy”. Recently, we have a HK$2 increase. Using 5.5 rate, that translate to SG$0.35cents increase for flag down from original 18 to now HK$20. $0.35cents for increase due to defray of cost due to FUEL increase. HK taxis do not have have additional or hidden surcharges such as peak hour, city surcharge, ERP etc. All well and good and frankly, I have not been caught in any bad jams either though at times during peak it may take me extra 10mins more say from central to causeway bay. So in all your theories, do explain to me if SG taxi companies are not ripping us off, so what else is there? Do sg taxis measure wider or bigger? Are they providing extra services like food and drinks? Actually no. So, while I agree with you that increase is unavoidable, yet I think there is room to review the whole fare structure and like what HK lawmaker said to HK electric in their proposal to up the price, “there is room to make adjustment for a lesser price increase”

    One of the only few reasons I can think of changing the peak hr surcharge is the companies’ way to stretch from 6-12am is the lazy way out to prevent “missing taxis” in the twilight hours of 11pm-12am. They couldnt find a more effective way to weed out the crappy taxi drivers and so to “solve” the old time problem, they figure a blanket coverage will increase profits and reduce the “complaints” of missing cabs. To me, they are just copping out. No one can convince me that 9-12am is peak hour on the road. Peak hour means everyone is out and about. Malls closed at 10pm in general. Office workers prob stay at most till8pm. So what is this peak hour based on from taxi companies? Not explained huh.

    To throw in insult, I am all happy to pay if the service is good such as BLACK london cab where drivers actually have to take route test to know the areas. Sg drivers are so crap nowadays with an attitude. Just the other day, we board a cab and ask to head to a building along tanjong pagar road. We even had the courtesy to print a map. Instead of trying to help us, the taxi driver snapped and said he had no idea where. We got really mad and asked him, “YOU HAVE NO IDEA WHERE TANJONG PAGAR MRT IS RIGHT IN THE MIDDLE OF THIS MAP?” That shut him up a little and then grumbled and muttered under his breath before he drove off with UNCERTAINTY. It isnt the first time I have encountered all these crappy drivers. They made me pay all the surcharges and peak hour but they often drop me off miles away from the desired stop because either I had to keep paying while they circle around to find the right place, or they snap at me telling me they have no idea. Thanks alot. In HK, i never ever had such incidents in the 4 years here but everytime i take a SG taxi, bad service, high premium cost makes it hard to swallow this price increase for a “luxury” mode of transport. Incidentally before I forget to mention, SG train network while acceptable, is nowhere as brillant as Japan or HK. It’s bursting at its seam at peak hour and once, I had to miss 3 trains before I call it quits to try to hail a cab, or rather force to call one. So if I am not getting a good train service, appalling bus service, then to me, taxi is more like a supplement to cope with the ailing train service than a form of luxury mode of transport.

    Sure, taxi companies are not charity but profit centers. That I can understand. However, are you sure what we have in singapore is a fair and just price system? Are you sure that the prices couldnt be adjusted to better reflect the company’s position of a need to make a profit, instead of portraying the perceived notion that they are ripping people off?

    PS: I wont bother to match taxi fares to the Big Apple because there is again no comparison there with their shite train system. Europe? Everything there is expensive. Taiwan? Oh its so cheap, much cheaper than SG. Any other developed country you want to mention that isnt too far off the Asia grid?S. Korea cab actually isnt that bad btw. Not very pricey either.

    • Thanks. Much as I’d like to, I’m not here to compare Singapore taxi fares vs other countries, to ruminate about whether we have a better taxi fare system compared to other countries, whether we have a fair or just system, etc.

      This post was simply to point out the fallacies behind the complaints.

      You seem to have a lot of material on how good other countries’ taxis are compared to Singapore, why don’t you write something and publish it?

  13. icgat says:

    I only have 2 questions for you.
    i) You keep bringing companies such as Apple up and linking this to the profit motive. Who can really stop them raising prices? I’m not really sure…. Now, Comfort Delgro…. erm, THE GOVERNMENT CAN if it WANTED TO, don’t you think? (thanks Ryan, for actually pointing out the fallacy by the self-proclaimed fallacy buster)
    ii) Seriously, if your “realpolitik” fallacy-busting views make you feel so good, why not do something about it and enlighten the rest of us – run for GE2016, be the best loser, or HEAVEN FORBID, win, and step up to the plate and tell us what’s really the problem? Or don’t you think there’s one and this is just good ol’ Smithian free markets at work.

    I love you neo-cons. One minute you can’t stop being Asian and unique, and having different views from the West on issues like, oh say, human rights… but when it comes to money, dayammm… you’re more Wall Street than Wall Street.

    • Thanks for comments. I only have 2 responses for you.

      i) “THE GOVERNMENT CAN if it WANTED TO”– Of course, the Singapore govt is so powerful, it can do anything. Sure– it can even order all companies to give free rides, free calls, free food, etc to every Singaporean if it wanted to. But should it? If it starts to mix politics and business, if it starts telling companies to raise prices or cut prices for political reasons, if it stops its policy of non-interference in commercial decisions of companies it invests in– what do you think could happen?

      At the very least, I’d say then setting up companies becomes a waste of time. Why hire CEOs, directors, managers, etc. if all you want is for them to carry out the govt agenda?

      But if you take your assertion to the logical conclusion, what you mean is that companies should be used to advance the political agenda of a ruling party, to keep it forever in power, at the expense of commercial viability, with all kinds of conflict of interest and political interference in business.

      Is that what you are really asking for? If so, please say it out LOUD.

      ii) What really is the problem is that people like you are not happy but do not understand how to solve the problem except to say it’s some evil plot of the govt/PAP/Temasek/etc.

      You find it hard to accept that inflation affects everyone, incl. GLC’s.

      You refuse to accept that prices have to go up, not because of a govt plot, but because of market conditions.

      You think that just because the govt owns companies, those companies owe you a duty never to increase prices, and that the govt should tell commercial companies what to do.

      Get real man! No company owes you a price cut, just like you don’t owe any company your business. You can’t understand that if you think a company’s price is too high, the thing you should do is stop patronising it. Instead, you want to pull politics into business.

      You’re more ignorant than ignorant.

  14. Caleb says:

    I find it hard to catch a cab nowadays. Sometimes, even booking a cab is difficult. The price is too low, too much demand for too little supply. I suspect the government has a hand in keeping the prices low. But its not helping. We need to let the taxi operators to increase the prices even more, perhaps at twice or trice the current level?

    In that way, taxi driving will become more attractive as an occupation, we will see more cabs on the road, and less people will take cabs. Somehow, we will get to an equilibrium.

    But no… People like to complain. I blame it on information flowing freely. 100% of the population is looking at how the top 10% of people live. And they expect to live like that. I’m sorry. By definition, on average people get to live average lives. Thats at the 50th percentile, not 90th. This is whats making people unhappy.

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