Taxi operators may get green light for fuel surcharge

Government to study surcharge as way round controversy over fare rises, which benefit vehicles’ owners rather than the drivers

PUBLISHED : Saturday, 22 June, 2013, 12:00am
UPDATED : Saturday, 22 June, 2013, 4:18am

The government is planning to study the feasibility of imposing fuel surcharges on taxi passengers, undersecretary for transport and housing Yau Shing-mu said yesterday.

In a Legislative Council transport panel meeting, Yau said the government would look into how such surcharges worked overseas. The study is expected to take up to 14 months to complete.

Although taxi drivers had pressed for a fuel surcharge for years, most people might oppose it, he said.

"Approving such a surcharge would mean allowing the taxi trade to raise fares through an additional channel," Yau said. "Both the government and the Legislative Council would have less control over fares if taxi [operators] could increase surcharges directly."

Under the existing mechanism, taxi operators can raise fares only after discussions in Legco and with the Executive Council's approval. Veterans of the trade have criticised that mechanism as inflexible, given that fuel prices fluctuate over short periods of time.

Yau's comments came as lawmakers debated fare increase applications filed with the Transport Department in January. Under the proposals, the flagfall charge would rise by HK$2 for urban taxis and by HK$2.50 for cabs in the New Territories.

The increase would take effect before the end of the year if Exco approved the applications, Yau said. Once the fare rises had been settled, the government would begin studying fuel surcharges, he said.

Lawmakers voiced concerns at the meeting that higher fares did not lead to more income for drivers. They also questioned whether speculation on taxi licences would prompt owners to increase rental fees.

Fares for urban taxis rose 5.15 per cent in July last year. Yet according to government statistics, the average monthly income earned by drivers who rent their vehicles fell 4.1 per cent, to HK$11,675, following the higher fares. Taxi owners who rent out the vehicles, however, saw their income rise 8 per cent.

Nine taxi driver groups protested against the fare rise proposal outside the Legco building, saying the increase would do more harm than good.

"Owner groups support the increase as it will fuel speculation on taxi licences," said Kwan Yuk-wah of the Urban Taxi Drivers Association Joint Committee, adding that a permit now cost HK$7.2 million.

Dr Hung Wing-tat, a transport analyst at Polytechnic University, said it would be hard to establish a mechanism determining the appropriate fuel surcharge, given the volatility of prices. Unlike in the aviation industry, there was also a lack of international standards for taxi surcharges.

Taxi operators on the mainland levy a surcharge, but the system is not comparable to Hong Kong's, as most taxis are owned by companies or the government rather than individuals. Adding a surcharge might cause confusion among passengers, Hung said.

"It may be drivers' wishful thinking that the surcharge would increase their income. Owners would find other reasons to increase their rent," he said.

According to the Consumer Council's price surveys, LPG for cars cost between HK$1.80 and HK$2 per litre in 2003. In May this year it cost between HK$4.60 and HK$5.10 a litre.