Monday, December 01, 2008
Laminated fare charts returned to taxis across the city yesterday as a new pricing system took effect.
Despite the HK$16 flagfall increasing to
HK$18, cabbies took to the streets in recent months in slow-drive protests to express dissatisfaction.
The adjustment will reduce long-haul fares and increase those of short journeys.
A cabbie surnamed Wong said he had received about 10 percent less income than normal and attributed it to the changes.
"I don't like the new policies at all. At this rate I'll lose HK$1,000 per month," he said.
But another driver named Yung said he did not think passengers would be worried about the changes.
In addition to an increase in base fares, there is an incremental increase from HK$1.40 to HK$1.50 up to nine kilometers. After that the increment drops to HK$1, meaning a trip that used to cost HK$100 will now cost HK$95.50 and a ride that cost HK$300 will now be 20 percent cheaper.
But a passenger surnamed Yum said she thought increasing short-haul fares during the economic downturn is simply bad policy.
"I never take long taxi rides so this new price scheme makes me unhappy," she said.
"There is no salary increase, but cabs are more expensive - from now on if I have the time I will try harder to find some other means of transportation."
Taxi Operations Association chairman Leung Shiu-cheong thought most customers would have a more relaxed response to the changes.
"Many people taking cabs are in a hurry and have the money to take a taxi," he said.

Leung said the impact of the new pricing scheme would depend greatly on the impact of the financial tsunami in the coming months.
He added many drivers reported losing 10 percent of business yesterday, adding that is normal for a Sunday.
"It will also take time for Hong Kongers to adjust to the new fares," the cabbie said.
He predicted taxi business would fall 5 percent in the next two weeks, but then climb back to regular levels by the end of the year.
Leung also called on the government for new legislation to ensure residents do not haggle with drivers for discounts.
He said despite the price decrease for long- haul taxi rides, discount taxis will continue to operate until the government intervenes.
The association will submit its review of the new pricing scheme in June to the Transport
Department and Transport Advisory Committee.
The Standard Hong Kong
Monday, 1 st December, 2008

Form 4 Economics: News Analysis
Taxi is a kind of superior good. In this poor economy in Hong Kong, people’s income drops and led to a decrease in demand for taxi services.
Increase the fares of short journeys on taxi.
As the fares of taxi increases from $16 to $18, the quantity demanded drops. Hence, the quantity transacted drops.
Therefore, the quantity of business drops and led to a decrease in earnings of taxi drivers.

The long-haul fares for taxi services decreases, due to as the peoples’ income decreases and the willingness of people for long-haul services are relatively low these days as the economy is poor.
There is an decrease in demand for long-haul taxi services. Both the fares of long-haul taxi services and the quantity transacted decreases.
As the market price ($18) for taxi services are much higher than the equilibrium price, the quantity supplied of taxi services will be larger than that of the quantity demanded. There will be excess supply for taxi services.
There are various substitutes of taxi such as bus, mini bus and Mass Transit
Railway.
As the price of taxi increases, there is an increase in demand for substitute (e.g.
Bus services). Because the passengers demand for cheaper transport and hence shift to substitute.