The soaring cost of fuel was being felt by Shanghai taxi passengers yesterday as the city rolled out its first taxi fare increase since 1998.

 

The increase, based on petrol prices, is expected to bring relief to the city's 45,000 cabbies, according to the Shanghai Price Bureau. In addition local taxi companies will also lower leasing fees charged on drivers so as to shoulder part of the increased fuel costs.

 

Work to adjust the meters on the city's 45,000 taxis started yesterday and will be completed by the end of the month.

 

The flag-down price in downtown, which covers the first three kilometers of a trip, has risen to 11 yuan (US$1.35) from 10 yuan (US$1.23) during the daytime. And the price after 11 PM will climb to 14 yuan (US$1.73) from 13 yuan (US$1.60).

 

Meanwhile charges on each additional kilometer will edge up 0.1 yuan (1 US cent) from the existing two yuan (25 US cents), according to the bureau.

 

In suburban areas a taxi passenger now pays nine yuan for the first three kilometers compared with eight yuan (US$1) previously. And the charges on each additional kilometer will also be increased by 0.1 yuan (1 US cent).

 

Taxi passengers will now pay 1.4 yuan (17 US cents) more for each trip on average and the local price bureau said the average rise in the cost of a journey was around 6.7 percent.

 

Local authorities also say they will step up efforts to clamp down on unlicensed taxis which are competing with legitimate operators in the suburbs.

 

The taxi fare rise comes after central government decided to establish a new mechanism in March which allows taxi fares to 'float' with fuel prices changes.

 

Crude oil prices have increased in recent years and this in turn has pushed up petrol prices. The type of petrol most frequently used by taxi drivers has risen by more than 30 percent compared with last March. Currently fuel costs account for more than 30 percent of a taxi's operational costs in Shanghai.

 

Local authorities started to pay fuel subsidies to taxi drivers last August. The current 800-yuan (US$100) subsidy for each car will be scrapped after the price rise.?

 

"The adjustment may partly offset the increase in fuel costs," said Shi Lizhong, a taxi driver with the Shanghai Dazhong Taxi Company.

 

According to Shi, a taxi driver may earn 600 yuan (US$75) more thanks to the price adjustment and few passengers will be affected this time as the change is moderate.

 

In addition, cab companies will charge less on leasing fees. Currently the monthly leasing fee is around 9,800 yuan (US$1,200) per car with some companies charging 12,000 yuan (US$1,480). The local price bureau has set a ceiling price of 9,500 yuan (US$1,171) per month.

 

While some taxi drivers appeared satisfied with the new arrangements, others were concerned with the prospect of future fare rises which could lead to a fall in customers.

 

According to the price bureau taxi fares will be adjusted each year according to fuel price fluctuations. Similar fair adjustments will be carried out in Beijing soon. At a public hearing held last month 56 percent of attendees agreed on a taxi fare increase proposed by the Beijing Municipal Transportation Bureau.

 

However, it reported many taxi drivers in the city were opposed to the new pricing plan for fear the rising fares would turn more customers towards unlicensed cabs -- estimated at 72,000, compared to 66,000 which are licensed.

 

(China Daily May 12, 2006)