Raising Taxi Rates Helps, But Rate Deregulation Is What’s Needed

The mayor and City Council should repeal the price fixing provisions in the Revised Ordinances of Honolulu.

by Dale Evans, President and CEO of Charley’s Taxi and Limousine.

On Jan. 22, Honolulu’s taxi rates rose for the first time since 2013.

The increase is certainly appreciated. It should also be noted that if the new maximum rates seem unusually high, it’s due to the city’s failure to raise rates over the past 10 years and a dramatic rise in taxi operating costs, including runaway gas prices.

By fixing our fares, the government controls how we do business and restricts our 1- to 8-passenger operating authority. This has left the taxi industry severely damaged, and it will take more than a rate increase to rebuild it. What’s needed is a solution that offers the potential for sustainability for taxi companies and drivers, and a better deal for consumers. I believe it starts by rethinking the entire structure of taxi regulations and putting an end to the rate-setting regulations.

In recent years, technology has brought sweeping changes to the private transportation industry. Unfortunately, taxi companies have been unable to take advantage of any of these changes because we’re restrained by antiquated government rules and regulations that date back to 1961, a time when smartphone apps were unimaginable.

Small minority taxi companies must literally beg regulators if they want to innovate and improve, a process that can take years and may never happen. In many cases, we’re required to publicly disclose proprietary information and trade secrets when seeking permission to implement technologies, such as those that pertain to vehicle availability and quality, and pricing of services.

When transportation network companies — aka TNCs — such as Uber and Lyft first entered Hawaii, the government’s initial response was either to outlaw them or burden them with the same regulations as taxis. In the end, neither happened.

But policymakers outside Hawaii are beginning to take a new approach. They are aiming to achieve regulatory parity between TNCs and taxis by deregulating taxi rate controls.

We support that model. TNCs are our competitors and yet, unlike taxis, they are not at the mercy of a price-setting regulatory process that doesn’t understand the realities of our business yet arbitrarily controls our destiny.

We are asking the mayor and city council to repeal the price fixing provisions in the Revised Ordinances of Honolulu (ROH) 12-1.10.

The regulatory process, as it stands, has left the taxi industry in crisis:

• 75% of taxi drivers have left the business.
• A taxi fleet that numbered about 2,500 in 2015 has been reduced to just a few hundred today.
• About 20% of taxis are dispatched by GPS/radio systems matching drivers to trips.
• More than half of Hawaii’s taxi companies have gone out of business. 
• In 2016, the city created confusion between the Taxi Ordinance ROH 12-1 and the Private Transportation — Ordinance ROH 12-6 that applies to both taxis and TNCs, exempting TNCs from the costs, operating authority and price restrictions imposed on taxicabs in ROH 12-1.

One result is that Honolulu now has the fewest Wheelchair Accessible Van taxis in the nation. This comes at a time when the City and County of Honolulu has entered into a settlement agreement with the U.S. Department of Justice aimed at improving the service level of TheHandi-Van, the city’s main para-transit service, which was found in violation of Title II of the Americans with Disabilities Act.

For more than 30 years, taxi companies like mine pleaded to be allowed to offer WAVs and other types of premium vehicles at different prices to meet the needs of the disabled community as well as those of three-generation families, high-end residents and travelers, and a variety of other folks.

But investing in a $65,000 to $78,000 WAV, or any premium vehicle, doesn’t make business sense because taxi regulations mandate a “one-rate-for-all-vehicles” policy that encourages the use of older, second-hand vehicles rather than investing in new vehicles.

Technology has brought sweeping changes to the private transportation industry.

While this policy applies to taxis, TNCs are free to set rates according to vehicle class and thus promote higher quality.

Rate deregulation would allow Charley’s and other taxi companies to price our services competitively and innovate in ways that will lead to improved operations for taxi companies and a higher level of service for consumers. It will also enable taxis to compete on a level playing field with the TNCs as well as each other.

I encourage the mayor and Honolulu City Council to look to New Zealand and Arizona, where deregulation has ushered in a new era of successful, high quality private transportation services.

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