Taxi Service Improvements

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TDM Encyclopedia
Victoria Transport Policy Institute

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Updated 14 May 2014

This chapter describes the role of taxi transport in a diverse transportation system,
and ways of improving taxi service quality.

Description
Taxi refers to for-hire automobile travel supplied by private companies. Taxi
service is an important Transportation Option that meets a variety of needs,
including Basic Mobility in emergencies, general transportation for nondrivers, and mobility for Tourists and visitors.
Taxi service can be an important backup option for other alternative forms of
transport, such as allowing pedestrians to carry large loads back from a
store, providing an emergency ride home when a cyclist has a medical or
mechanical problem, or a Guaranteed Ride Home for a rideshare or transit
commuter. Informal taxi service often develops in rural communities where
certain motorists will drive their neighbors for a fee. In this role, Taxi
Improvements can be an important support for TDM efforts to reduce
personal automobile ownership and use, and encourage use of alternative
modes.
Taxi service can be improved by:

Increasing the number of taxis in an area.

Increasing the quality of taxi vehicles (comfort, carrying capacity, reliability,
safety), improving support services (such as radio dispatch), driver skill and
courtesy.
Universal Design of taxi vehicles, including accommodating people in
wheelchairs and with large packages.
Reducing fares through regulation, competition, increased efficiency, incentives
or subsidies.
Allowing shared taxi trips (more than one passenger) and Paratransit services.
Providing taxi stands, curb access and direct telephone lines.

Taxi service is often regulated, with restrictions on market entry and pricing,
although many communities are implementing Regulatory Reforms to
encourage more competitive markets. Some experts recommend eliminating
most regulations and allowing unlimited entry into the taxi market (Moore
and Rose, 1998; Boroski and Mildner, 1998), but others argue that regulation
should be structured to maximize service quality (Nelson/Nygaard, 2001).

A number of factors can affect the quality of taxi service and its ability to
serve various types of trips. Below are some performance indicators that can
be used to evaluate taxi service:

Availability. Number of taxis per capita, or per non-driver in an area.

Availability of taxis that accommodate people with special needs, such as
wheelchair users.
Ease of ordering taxi services.
Reliability. Average dispatch time, and maximum delays.
Price for an average trip relative to users income. Availability of subsidies
and discounts for people with special needs (such as disabilities) and other
frequent users.
Vehicle comfort and cleanliness.
Driver and dispatcher courtesy.
Safety.
Number of user complaints.

How It Is Implemented
Taxi Improvements are usually implemented in cooperation between local
governments, which regulate taxi service, and private companies, which
provide taxi service. It sometimes involves transit agencies and other
organizations that contract for transportation services. Taxi improvements
may result from changes in taxi regulations, additional funding for subsidized
taxi services, and improvements by taxi companies. Regulatory Reforms may
be needed to eliminate unnecessary regulations and costs to taxi service.
Travel Impacts
Taxi Improvements can support use of alternative modes, including walking,
cycling, ridesharing and transit use, by giving those modes users a better
fallback option in emergencies. It can allow people to reduce their car
ownership. Analysis by King, Peters and Daus (2011) indicates that public
transport travelers often use taxis for a portion of their trips, for example, to
commute home after transit service ends. In these ways, Taxi Improvements
can contribute to relatively large reductions in vehicle travel. Experience with
Guaranteed Ride Home programs indicates that improving the availability of
fallback options can significantly increase use of alternative modes.
Table 1

Travel Impact Summary

Objective

Reduces total traffic.

Reduces peak period traffic.
Shifts peak to off-peak periods.
Shifts automobile travel to

Ratin
g
1
1
0
2

Comments
Supports use of travel alternatives,
and shared taxi service can replace
multiple car trips.

Supports use off travel alternatives.

alternative modes.
Improves access, reduces the need
for travel.
Increased ridesharing.

0
1

Increased public transit.

Increased cycling.

Increased walking.
Increased Telework.
Reduced freight traffic.
Rating from 3 (very beneficial) to 3 (very
impacts.

Shared taxis are a form of

ridesharing, and provides a fallback
option to rideshare users.
Provides a fallback option to transit
users
Can be an important emergency
option for cyclists who have
problems during a ride.

0
0
0
harmful). A 0 indicates no impact or mixed

Benefits and Costs

Taxi Improvements have relatively modest direct travel reduction impacts,
and may even increase vehicle travel in some situations, but support the use
of other alternative modes, including walking, cycling, ridesharing and public
transit use, and so may make a modest contribution toward congestion
reductions and other TDM objectives. It improves Transportation Choice and
Resilience. Benefits and costs depend on what type of taxi service
improvements are implemented. They may include changes (increases or
decreases) in taxi service quality, availability, fares, wages or profits. Boroski
and Mildner (1998, Exhibit 2) provide information on average taxi fares in
typical North American cities.
Table 2

Benefit Summary

Objective

Rati
ng
1

Comments

Congestion
Modest direct travel impacts, but supports other
Reduction
alternative modes.
Road & Parking
0
Savings
Consumer Savings
1
Transport Choice
3
Road Safety
0
Environmental
0
Protection
Efficient Land Use
0
Community Livability
1
Rating from 3 (very beneficial) to 3 (very harmful). A 0 indicates no impact or mixed
impacts.

Equity Impacts
Taxi service is an important transportation option for many people who are
transportation disadvantaged, and often provides Basic Mobility. Taxi
Improvements can help achieve equity objectives.
Table 3

Equity Summary
Criteria

Treats everybody equally.

Rati
ng
1

Individuals bear the costs they

impose.
Progressive with respect to
income.
Benefits transportation
disadvantaged.
Improves basic mobility.
Rating from 3 (very beneficial) to 3
impacts.

Comments
Gives non-drivers better access and mobility
options.

0
2
3

Improves mobility services for lower-income

people.
Improves mobility services for non-drivers.

3
Taxi service often provides basic mobility.
(very harmful). A 0 indicates no impact or mixed

Applications
Taxi service improvements can be implemented in nearly any geographic
area. They are implemented primarily by local and regional government
agencies, and businesses.
Table 4

Application Summary
Geographic

Large urban region.

High-density, urban.

Ratin
g
2
2

Medium-density,
urban/suburban.
Town.

Low-density, rural.

Organization
Federal government.
State/provincial
government.
Regional government.
Municipal/local
government.
Business
Associations/TMA.
Individual business.
Developer.
Neighborhood association.
Campus.

Commercial center.
2
Residential neighborhood.
2
Resort/recreation area.
3
College/university
2
communities.
Ratings range from 0 (not appropriate) to 3 (very appropriate).

Category
Improves Transport Choice

Ratin
g
0
1
2
3
2
1
0
1
2

Relationships With Other TDM Strategies

Taxi Improvements can support Guaranteed Ride Home, Commute Trip
Reduction, Tourist Transport Management and Campus Transport
Management. They can be part of Shuttle and Transit Service Improvements.
Regulatory Reforms can support Taxi Improvements.
Stakeholders
Stakeholders include regulatory agencies (often local or regional
governments), taxi companies, organizations that contract for taxi services,
and users.
Barriers To Implementation
Barriers can include institutional resistance to change from local
governments and existing taxi companies, and lack of organization by users.
Best Practices

Consider taxi service as an important component of the transportation system.

Minimize unnecessary taxi service regulations and costs.
Allow shared taxis.
Encourage competition.
Encourage taxi companies to choose vehicles that accommodate people with
disabilities, bicycles and large packages (Universal Design).
Involve users in establishing taxi regulations and policies.
Subsidize taxi service as a way to provide mobility in lower-density areas and
off-peak times.
Provide public support, including taxi stands and curb access.

Wit and Humor

A taxi is picking up a passenger on a downtown street when a second man
rushes up and says breathlessly, I need to catch a flight at the airport in half
an hour. Ill give you $50 if youll let this cab take me there first. The first
passenger agrees to this, and away they go.
A few minutes later the second passenger says, Its very important that I
make this flight. Please drive as fast as you can.
The driver does his best, but traffic is heavy and they are not making much
progress. After a few minutes the anxious passenger says, I must make this
flight! Ill give you a $100 tip if you can get me to the airport in 20 minutes.
The driver takes short cuts, but progress is still slow.
After another ten minutes the taxi is still just at the edge of town and the
passenger yells, Its essential that I make this flight! Ill give you a $500 tip if
you can get me to the airport in ten minutes. This really gets the taxi
drivers attention. He begins to speed down the road and race through

intersections.
Five minutes later the passenger is bursting with anxiety, and yells, Its
imperative that I make this flight! Ill give you a $1,000 tip if you get me to
the airport in less than five minutes!
The taxi driver floors the accelerator and zooms down the roadway, swerving
wildly through traffic, crossing back and forth over the center line, just
missing oncoming vehicles. In front of the airport, as the taxi makes a wild
swerve the urgent passenger hands the driver a thick wad of bills, jumps out
of the moving vehicle and disappears into the terminal. Without stopping the
taxi continues back to the highway.
The first passenger, pale from fear, looks at the taxi driver and the pile of
money and says, Goodness sakes, that was amazing driving. You really
earned that tip. What do you plan to do with all that money?
The driver replies, Well, first I should have the darn brakes fixed on this
taxi.

Examples and Case Studies

City of Rimouski's Taxibus (www.movingtheeconomy.ca)
The City of Rimouski, Quebec (population 32,000) has found that taxies can provide
a viable and cost-effective alternative to traditional bus transit systems. After
studying various transit service scenarios using buses, Rimouski chose to launch its
TAXIBUS service. TAXIBUS, established in 1993, is a demand-responsive service
which relies solely on local taxicabs. Quebec's Ministry of Transport developed a
software to help manage the service.
TAXIBUS operates Monday to Friday, serving 300 stops by predetermined schedules.
Passengers, who pay $2.40 per ride or $70.55 per month, must reserve one hour
ahead of time by phone (schedules are cancelled when no reservations are made).
The taxi drivers are paid according to the readings of the taxi meter, from the time
the first passenger is picked up, to the time the last passenger is dropped off. A
recent cost comparison with other transit services in Quebec cities of similar size
showed that costs associated with TAXIBUS are an average of CAN$12 less per
capita.
After four years of operation, TAXIBUS has become increasingly popular, growing by
37% over four years (current figures are 60,000 trips per year). Cost increases were
kept down by a 6% increase in productivity (by grouping more passengers together
on a single ride ? which also has ecological benefits). The number of passengers per
ride rose from 1.6 during the first few months of operation to 2.8 by 1996. Service
costs per ride have dropped from $5.18 to $4.35 per passenger (21% of which are
administrative expenses).
Taxies can provide a variety of transportation services. These include: carrying
people to a transfer location such as a bus terminal or railway station (called
treintaxi in the Netherlands); replacing buses between rush hours; extending the
service schedule of regular public transit; providing service to scarcely populated
areas; acting as a complementary service for transportation of people with
disabilities; and transporting groups previously organized by a third party.

Taxi Deregulation Trends (Kang, 1998)

Taxi service has been deregulated in many countries, including the U.S, U.K., New
Zealand, Japan, South Korea, Australia, The Netherlands and Sweden. As an
example, The Swedish Transport Policy Act of 1989 provided the framework for the
deregulation of the industry in 1990, suggesting that the best service for the lowest
economic cost would be supplied by a deregulated taxicab industry subject to free
market forces. Deregulation of the Swedish taxi market was carried out in five steps:
1.

Barriers controlling entry were removed, so that an operator can have as many
taxicabs as desired. This relieved the county councils of their former task of
estimating the demand for taxi services in each operating area.

2.

Fare controls were removed, so that taxi companies became to be able to set
their own fares. However, they were required to inform customers about the fare
prior to trips, and taxicabs must be equipped with receipt writing meters.

3.

The requirement for all taxicabs to belong to a radio booking centre was
abandoned. At the same time, in order to stimulate competition between
centres, publicly owned centres were established in the market as an alternative
to the existing privately owned centres.

4.

Geographically restricted operating areas were eliminated.

5.

Strictly regulated operating hours were removed.

Many U.S. cities have partially or wholly eliminated local taxi regulations during the
late 1970s and early 1980s. These included San Diego, Seattle, Phoenix, Portland,
Sacramento, Kansas City and Milwaukee, as well as some smaller cities of
significant size such as Tucson in Arizona, Oakland and Fresno in California, Raleigh
in North Carolina, etc. Further discussions on taxi deregulation are still on going in
America, and it has occurred or tried in several cities in 1990's, including
Indianapolis (1994), Houston (1995), Denver, Hartford and Boston.
Taxi Regulation Review (Aarbaug 2014)

A detailed review of taxi market regulatory reforms for international cities

reached the following conclusions:
There are two general recommendations for taxi regulations. First, taxi
markets are local and this has to be kept in mind when taxi operators are
regulated. Second, real taxi markets are a complex mix of different segments
with different properties. This means that there is no single right answer to
the question of regulation. Each segment has a different theoretical optimal
solution. This points in to a multi-tier system (regulating the different
segments separately). However there are both economics of scale and scope
at work, favouring a single tier system (having the same regulation for all
segments).

In terms of which regulatory approach to follow, the link between objectives

and regulations are strongest with the qualitative approach, however this
approach is costly. Quantitative regulations are much less costly, but is not
as easy to link with policy objectives (unless congestion is the main concern).
Economic regulations are most suitable to address the information
asymmetry in the street market segments. In other words, in all but the
largest of cities, where costs of regulation are low compared with the size of
the industry, and the economics of scope from using the same vehicle in
different market segments are insignificant, regulators can choose between
several "second best" solutions. As a consequence taxis should not be seen
out of context from the other mobility and environmental objectives of a city
Indianapolis Taxi Regulation Reform (Moore and Rose, 1998)
In 1991, the city of Indianapolis created at Regulatory Study Commission (RSC) to
implement regulatory reforms. One of its major achievements was to reduce
unjustified regulation of the citys taxi services.
Like other large U.S. cities, Indianapolis's taxi industry was heavily regulated, yet
the quality of service was poor. Long waits were common after calling for a taxi,
particularly in lower-income areas. Taxi fares for long trips were higher in
Indianapolis than in many other major cities. A small number of companies
dominated the Indianapolis taxi market. Only 392 cabs were permitted to operate in
the city. One company controlled more than half of those licenses, and competition
among cabs was limited. A substantial number of the licensed taxis were not in
service at most times on an average day. Owners of a taxi license make most of
their money from regular fares, so investing in wheelchair accessibility made no
sense. The city did not allow specialized service, so the disabled had to use
expensive private ambulances for door-to-door trips.
Minority organizations supported reforms. The restrictions on taxi licenses, fares,
and service levels all but prevented low-income drivers from starting their own cab
companies, and reduced the quality of service in lower-income neighborhoods.
The RSC rewrote Indianapolis taxi regulations with an eye to increasing competition.
This included the following changes:
Removed the overall limitation on the number of taxis that can be licensed.
Allows taxi companies to set fares, with some constraints on maximum fares.
Eliminates arbitrary rules, such as requiring taxi drivers to wear a special badge
and cap, and specifying the number of seats taxis could have.
Allows taxis to "cruise" for customers.
Provides greater flexibility in safety regulations.
Allows special taxis to carry passengers in wheelchairs.
Allows jitney businesses greater operational flexibility.
Allow jitney businesses to provide a "charter service."

References And Resources For More Information

Jrgen Aarhaug (2014), Taxis as Urban Transport, Transportkonomisk institutt
(Institute of Transport Economics) (www.toi.no); at
https://www.toi.no/getfile.php/Publikasjoner/T%C3%98I%20rapporter/2014/13082014/1308-2014-elektronisk.pdf.
John Boroski and Gerard Mildner (1998), An Economic Analysis of Taxicab
Regulation in Portland, Oregon, Cascade Policy Institute (www.taxil.org/portland01.htm).
Canadian Taxicab Association (www.cantaxi.ca) assists taxicab operators to improve
service, safety and profitability.
Katherine Freund (2000), Independent Transportation Network; Alternative
Transportation for the Elderly, TR News, Vol. 206, Jan/Feb. 2000, pp. 3-12.
GTZ (2003), Sustainable Transportation: A Sourcebook for Policy-Makers in
Developing Countries, (www.sutp.org), by the Sustainable Urban Transport Project
Asia (www.sutp-asia.org) and Deutsche Gesellschaft fur Technische Zusammenarbeit
(www.gtz.de). In particular, see Modules 1b (Urban Transportation Institutions), 3c
(Bus Regulation and Planning) and 6 (Resources for Policy Makers).
International Association of Transportation Regulators (www.iatr.org) provides an
international, professional association for transportation regulators to cooperate and
consider matters of mutual interest and concern, and to exchange ideas.
Choong-Ho Kang (1998), Taxi Deregulation: International Comparison, PhD
Dissertation, Institute for Transport Studies, The University of Leeds (www.taxil.org/kang0898.htm#c3).
David King, Jonathan Peters and Matthew Daus (2011), Taxicabs for Improved
Urban Mobility: Are We Missing an Opportunity?, Transportation Research Board
Annual Meeting (www.trb.org); at http://amonline.trb.org/1shm0t/1shm0t/1. Also
see, What Taxis Add to Public Transit, by Eric Jaffe, The Atlantic Cities
(www.theatlanticcities.com/commute/2012/02/taxis-part-transit-system/1133).
Daniel Klein (1996), Adrian Moore and Binyam Reja, Free to Cruise: Creating Curb
Space for Jitneys, Access, No. 8, Spring 1996, pp. 2-6.
Daniel Klein, Adrian Moore and Binyam Reja (1997), Curb Rights: A Foundation for
Free Enterprise Urban Transit, Brookings Institution Press (www.brookings.edu).
Adrian T. Moore and Tom Rose (1998), Regulatory Reform at the Local Level:
Regulating for Competition, Opportunity, and Prosperity, Policy Study No. 238,
Reason Foundation (www.reason.org); available at
www.urbanfutures.org/ps238.html#A1.
MOSES - Mobility Services for Urban Sustainability (www.moses-europe.org) is
developing mobility services to reduce dependence on the private car throughout

Europe. It will employ new technologies to integrate urban transportation services

(e.g. carsharing, public transport, taxi, cycling, delivery services etc.) for maximum
efficiency. This project is sponsored by the European Union.
Nelson/Nygaard (2001), Making Taxi Service Work in San Francisco, San Francisco
Planning and Research Association (www.spur.org/transarts.html).
Robert W. Poole, Jr., and Michael Griffin (1994), Shuttle Vans: The Overlooked
Transit Alternative, #176, Reason Public Policy Institute (www.reason.org).
Schaller Consulting (www.schallerconsult.com/taxi) provides information on taxi
regulation and policy.
Bruce Schaller (1998), Issues in Fare Policy: The Case of the New York City Taxicab
Industry, Presented at the TRB Annual Meeting, Schaller Consulting,
(www.schallerconsult.com/taxi/trb.htm).
Bruce Schaller (1999), Elasticities for Taxi Cab Fares and Service Availability,
Transportation, Vol. 26, 1999, pp. 283-297.
Bruce Schaller (2005), A Regression Model Of The Number Of Taxicabs In U.S.
Cities, TRB Annual Meeting (www.trb.org).
Taxi Study Panel (1999), A Study of the Taxi Industry in British Columbia, BC
Ministry of Transportation and Highways
(www.th.gov.bc.ca/publications/reports_and_studies/taxi/taxi.pdf).
Taxi-L Website (www.taxi-l.org) provides links to documents and links related to taxi
transport.
Taxicab, Limousine & Paratransit Association (TLPA) (www.tlpa.org) is a non-profit
trade association of and for the private passenger transportation industry.
Taxi and Livery Topics Webpage, (www.schallerconsult.com/taxi/newfb/index.html)
by Schaller Consulting, provides a variety of information on taxi service planning
and management, mainly related to New York City.
The Taxi, Urban Mobility Solution of the Future (www.ville-enmouvement.com/taxi/uk/index.html) is a conference held September 2007 to
explore the role that taxi transport plays in urban transport systems.
Michel Trudel (1999), The Taxi as a Transit Mode, Transportation Quarterly, Vol.
53, No. 4, Fall 1999, pp. 121-130.
Edward Weiner (1980), Characteristics, Uses and Potential of Taxicab Transport,
Urban Transportation, Eno Foundation (www.enotrans.com), pp. 322-332. This paper
describes various factors concerning how taxi service is organized, the types of trips
it serves, and ways to make taxi service more effective at providing mobility.

Martin Wohl (1980), Increasing The Taxis Role in Urban America, Urban
Transportation, Eno Foundation (www.enotrans.com), pp. 329-332. This paper
describes the roles that taxis provide in urban mobility, barriers that taxis transport
faces, and strategies for improving the quality of taxi service.
This Encyclopedia is produced by the Victoria Transport Policy Institute to help improve
understanding of Transportation Demand Management. It is an ongoing project. Please send
us your comments and suggestions for improvement.

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