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Transport Department's response on taxi fare increase applications

     In response to the media enquiries about taxi fare increase applications, a spokesman for the Transport Department (TD) said today (May 24) that the Government had fully considered the views on fare increase applications expressed by the urban, NT and Lantau taxi trades at the respective Taxi Conferences held in March and April this year. Most of the taxi associations supported resolving the increase in operating costs by way of fare increase, while some wished to introduce a fuel surcharge mechanism.

     In view of the strong request from the taxi trades, the Government had processed the applications as quickly as possible with a view to relieving the trades' pressure from the rising operating costs.

     Recently some taxi associations changed their positions and indicated objection to the fare increase applications. Given the attitude of some taxi associations had changed resulting in divergence on the trades' view on fare increase, the Government considered that the trades should further deliberate among themselves. The Government would re-consider the fare increase applications after the trades had reached a mainstream view.

Fuel Surcharge

     Some taxi associations suggested imposing a fuel surcharge on passengers when the LPG price reached a certain level, and for the amount of the surcharge to be adjusted upward or downward automatically in tandem with the LPG price without the need to consult the Legislative Council, and to obtain approval from the Government.

     The fuel surcharge arrangement would mean another alternative in addition to the normal taxi fare adjustment mechanism for the taxi trade to increase taxi fares. As the proposed mechanism is a fuel surcharge to be adjusted upward or downward automatically in tandem with the LPG price, it would mean that the Government could not regulate the level of surcharge, and no consultation with the Legislative Council. This would undermine the protection to the passengers.  As fuel is a cost item of road-based transport mode, simply imposing a surcharge on certain cost item thereby transferring the cost fluctuation concerned completely and directly to the consumers is unfair.

     In processing the taxi fare adjustment applications, the Government would all along consider and evaluate various relevant factors, including changes in the costs of taxi operations, revenue of the trades, acceptability of the general public, etc. In the event that some cost items increase whilst others decrease or when both revenues received and costs increase, this approach can take into account whether the relevant factors would even each other out, rather than simply imposing a surcharge on certain cost items.

     If a fuel surcharge mechanism co-existed with the normal taxi fare adjustment mechanism, coupled with changes in different cost items of taxi operation (including maintenance and spare parts, insurance, vehicle examination, management and radio station services), it might eventually result in multiple fare increases. This would increase the burden of passengers. It would also cause confusion to passengers, and easily lead to disputes between drivers and passengers as well as incidents of abuse.

     Furthermore, for an upward and downward adjustable fuel surcharge to be implemented, a discussion on the design of the relevant mechanism, the fuel prices that would trigger different rates of the surcharge, and the rates of the surcharge, as well as on the legislative amendments required would need to take place in the first instance.

     Therefore, without thorough discussions and general support of the community, we must not act hastily and must take careful considerations to protect the benefit of passengers.

     In regards to the comments that example should be drawn from the practice of passenger fuel surcharges in the air transport industry, we must take into account the consideration of the fundamental differences between air and taxi services. Taxis are often used by the public to interchange with other public transport systems, e.g. MTR, or to go to various destinations, it should adopt a fare system that is simple, clear and able to take care of the acceptability of the general public. Passenger fuel surcharges as part of aviation tariffs is an arrangement in accordance with the bilateral air services agreements that Hong Kong has entered into with its aviation partners. Airlines submit applications on a monthly basis for the consideration and approval of the Civil Aviation Department. Thus, there could be adjustments from month to month. Due to the fundamental differences, the passenger fuel surcharges of the air transport industry should not be applied to the taxi fare system.

Ends/Thursday, May 24, 2012
Issued at HKT 23:26


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