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Taxi Times International - June 2015 - English

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TAXI FARES Swedish taxis

TAXI FARES Swedish taxis must carry price stickers showing how much a typical journey of 10 km and 15 minutes should cost at different times (in yellow). SWEDEN: FLEXIBLE FARE-SETTING, LIMITED COMPETITION If flexible taxi fares are the way forward, surely there are many lessons to be learned from Sweden. Good ones and bad ones. Sweden has had price freedom for taxis since deregulation in 1990. It became famous for the unregulated taxi fares which gave rogue players the chance to charge exorbitant prices. Travel magazines and guidebooks have warned tourists and even the BBC has taken up the taxi problem. DEREGULATION WITH OPPOSITE EFFECT Following deregulation in 1990 the Swedish taxi industry witnessed a number of disreputable companies and soaring prices, despite intentions of freedom to establish themselves and taxi fares which should be lower. Since deregulation authorities have worked to achieve control and in 2011 the price sticker regulation came into effect. The regulation states that every taxi must have a visible price sticker citing the various price levels and maximum prices. In order to simplify comparison for the customer each taxi company must show how much a typical journey of 10 km and 15 minutes would cost. The sticker is checked by the police and the taxi licence is removed if a taxi has no sticker. According to Anders Berge, lawyer at the Swedish Taxi Association (STA), representing 70 % of Sweden’s taxi industry, the major companies charge around 300-325 crowns (30-35 Euro) in benchmark fare. He agrees that the prices many taxi drivers are charging are too high. “Of course, many feel cheated if you later find out that you could have traveled for 50 Euros instead of 300 Euros, but it is important to emphasize that you are not deceived. There is free pricing, and that is how it works. However, it is clearly not good.” Following deregulation of the taxi market in 1990, the number of taxis has increased by 22 percent after the regulatory reform, according to the Swedish Bureau of Census. The price of the taxi fares during the same period increased more than the consumer price index. The taxi product has also changed, however, mainly because of a sharp increase in availability and reduced waiting times. BENCHMARK PRICES ARE LIKE KILO PRICES FOR POTATOES Taxi industry analyst Lars-Ingvar Johansson explains what flexible fares mean in a Swedish context: “Two forces are at work in Sweden: A liberal business climate, hence deregulation, and consumer protection, hence benchmark prices. Fare setting may be free, but they must be transparent and be within certain boundaries, which in effect makes them variable rather than flexible. Most major companies operate with fairly similar price structures and a number of fixed prices. Only street trips and trips to and from Stockholm airport are subject to real competitive initiatives.” From a marketing perspective one should think taxi companies would exploit the flexibility to set fares and manipulate them. But PHOTOS: Thomas Brinch that is not the case according to Johansson: “Taxi companies use variations within a fixed price system depending on booking methods (most companies have fixed-pricing booking apps), web, distance, geography, time of day (rush hours). And the sticker makes prices transparent and comparable, like comparing the kilo price for potatoes at the supermarket. In a way you might say that benchmark pricing has curbed price competition. The industry as a whole prefers transparency over wild-west methods and bad publicity.” PRICE TRANSPARENCY In a society used to paying high-level taxes the taxi price debate centres more on fairness than on flexibility: “Flexible taxi fares are important for the taxi industry like in any other liberal trade, that rely on a good price. But in Sweden fairness of competition, quality, safety and availability are equally important. And branding is above pricing. Swedish taxi companies are eager to brand quality, and safety and environmental concern. The effect of a free and unregulated taxi industry has led many customers to be willing to pay a premium for a fixed price they know beforehand, according to Johansson. Recently the police reported price tags of up to an incredible 40.000 crowns (€ 4.000) for a 30 minute ride from Stockholm Airport to the inner city. But with a recent regulatory supplement to the price sticker law the problems with the exorbitant taxi fares in the major Swedish cities have mostly gone. This new law, introduced at the beginning of the year, requires customers to get a binding price in advance if the taxi company operates with a benchmark price of over 500 crowns (€ 537). “What happened was that almost all rogue players went down to a benchmark price of 499 crowns. The general perception is Taxi fares in Stockholm start at about 40 crowns (4 Euro), and the taximeter then adds about 11 kronor (1 Euro) per kilometer, depending on what time it is. Taxi fares in Sweden are not regulated; it is up to every company to set their own prices. The main six or seven taxi companies have similar price strategies. There are smaller companies that tend to be much more expensive, sometimes by up to 100–300%. that the soaring prices have disappeared from the street”, says Per Juth, Director of the Swedish taxi association STA. Magnus Klintback, CEO of Taxi Kurir Stockholm adds: “The problems with exorbitant prices have decreased dramatically. It is very positive that the amendment had this effect. Stockholm suffered from a bad reputation because of the exorbitant prices of the rogue players.” Berge: “We have arranged for all taxi drivers to transfer their taximeter readings to accounting centres where tax authorities have access. This will be introduced next year (2016). According to Berge, a wide range of authorities welcome the proposal for centralized fiscal control. “As a national taxi association we work for equal competition and the industry must be free of unscrupulous pricing practices. To implement these improvements provides benefits for customers, the taxi industry and tourism and for society at large. Not to implement them only benefits the rogue taxi business.” thb 8

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