The economics of taxi operating

I suppose it will be easy for taxi owners to simply criticize me by saying “Have you ever operated one?” And they will slam me with that, because obviously I’ve had other things to do in life. But that still does not render me powerless to express the view that these people simply have no basic ideas of what opportunities they are simply throwing down the gutter simply to carry on engaging in the type of behavior and approach where they only view their customers as guys to fleece, especially if they are foreigners.  My gripe naturally starts from the recent news that they are open facedly refusing to operate their taxi metres.

For one thing, indulging in the type of cartelized action where they all gang up together at some place (airport or elsewhere) and expect, no demand, that their customers will say Yes to any uniformly pre-agreed price for a ride to anywhere, this is simply behavior which it is only because of spineless regulators and/or police that they carry on getting away with it.

Secondly is it possible that, at a time when the whole country is agog with the disaster that the Arriva bus system, they do not see the opportunities available to them to keep their taxis continuously on the go by simply picking up groups of people from near bus stops at a sensible price which the passengers, as a group, would be prepared to share, even if individually it would be higher than the Arriva fare?

It is only in Malta that the use of taxis by the local people is so small.  In most of the cities I’ve visited in Europe and the US “taking a taxi” is something which many locals do much more often than we here do, sometimes even as a matter of habit.  So why is it that here the perception is one where an automatic notion of “being fleeced” clicks in the moment one starts considering using one? And the answer is simple; the taxi driver-owners have created that same perception/reality.

Now let’s back to the economics of the thing.  Like a ship and a plane, a static taxi is dry or dead investment. It is when the engine is running and the taxi is going someplace with passengers, that money is being made. So the more, and the longer, that a taxi is being driven on the road, the better is the chance that the capital invested in buying the taxi in the first place, and then covering operating costs (fuels, licence, insurance, wages, etc), will be recuperated and profit made. And then from or after such basics then profit also ensues.

Arguing differently…bringing up reasons as to why there are so many or so few licenced taxis….as to why “government does not help”….all of that is simply bad economics.

John A. Consiglio