Taxicab rates and fares, San Francisco October 2002
Three proposals, discussion and suggestions

San Francisco's taxicab rate of fare is under review at the Board of Supervisors. The current rate became effective in Fall 2000.

The current rate is:

$2.50 for the first 1/5 mile or 60 seconds of waiting time, and

$0.40 for each additional 1/5 mile ($2.00 per mile)or 60 seconds of waiting time ($24.00 per hour).

Some trips over 15 miles may be charged at 150% of the amount showing on the meter. The 50% off-meter charge may cause an abrupt steep increase in the fare between 15 miles and 15.01 miles.

Due to a mathematical quirk in the rate ordinance of 2002, the current initial distance is 1/5 mile, not 1/6 mile as indicated on the rate cards. It means that customers get a little extra distance for the current $2.50 initial charge. In practice, one trip in six is currently undercharged by $0.40.

December 2002 update: the rates adopted in November are the same as the SFTA proposal below, except that the flagfall is $2.85, not $2.75.



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The SFTA proposal:
A 12% increase

The San Francisco Taxicab Association has proposed an increase in the current rate of fare.

The new rate would be:

$2.75 for the first 1/5 mile or 60 seconds of waiting time, and

$0.45 for each additional 1/5 mile ($2.25 per mile) or 60 seconds of waiting time($27.00 per hour).

The following charts illustrate the effect of the SFTA proposed rate change. The first and second charts show the effect on fares over short and long distances. The third chart shows the percentage change between the current and proposed fares.

Observe that the lines in the two fare charts grow steadily further apart. The longer the trip, the larger the amount of the fare increase.

A ride to the airport that now costs $31.30 would go up $3.85 to $35.15, a 12.3% increase.

A 3 mile trip that now costs $9.30 would go up $1.10 to $10.40, an 11.8% increase.



Discussion of the SFTA proposal

The new rate would be, roughly, an across the board 12% increase. Long trip customers would see the largest fare increases.

If there is no decline in business following the rate increase, a driver who currently brings in $170 in fares (not including tips) would get $190, and a driver who currently brings in $200 in fares would get $224. Allowing for additional tips, drivers might see an extra $25-30 per shift. However, this is very unlikely because there is almost certain to be a decline in business following a 12% fare increase.

If New York City's closely studied 1996 fare increase is a reliable indicator, a 12% increase in fares should result in a 9.6% increase in revenue per mile. In that case, a driver currently bringing in $170 in fares would get $186, and a driver bringing in $200 in fares would get $219. Drivers might see an additional $20-25 per shift.

More likely, in my opinion, increased revenues would be less than expected, maybe just 6%. In that case drivers might see a revenue increase of just $12-15 per shift.

The reasons for predicting lower than expected revnues include BART, which begins service to the airport in a few months. A 12% fare increase on trips to and from the airport will give customers even more reason to choose BART. Between a $35 fare, an airport fee and a tip, customers will be paying $40 or more for an airport ride.

More generally, the Bay Area economy is experiencing its steepest downturn in many years. A large rate increase in the face of a severe recession may backfire, even if previous rate increases have always been advantageous.

The SFTA proposal envisions sufficient new fare revenue to more than make up for a proposed increase of $8 in the lease fees charged to drivers, which are currently pegged by regulation to $83.50 per shift. If new revenues are well below what might be expected in better times, then drivers may realize very little from the proposed increase.

An undesireable side effect of the SFTA proposed rate formula is that nickels begin appearing on the meter. Currently, all fares have a cents amount that is either 10, 30, 50, 70 or 90 cents. With five-cents in the picture, there will be 20 different cents amounts that may appear as part of the fare. The meter will show amounts such as $9.95. Why give customers such a blatant invitation to tip the driver a nickel?




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An alternate proposal:
A fifty-cent increase

If the current rate is increased to $3.00 for the initial charge, but everything else stays the same, the effect is a fifty-cent increase on all fares regardless of long or short distance.

The new rate of fare would be:

$3.00 for the first 1/5 mile or 60 seconds of waiting time, and

$0.40 for each additional 1/5 mile ($2.00 per mile) or 60 seconds of waiting time ($24.00 per hour).

The amount of expected new revenue would be linked to the number of trips, not the mileage as in the SFTA proposal. A driver who works the airport exclusively might see as little as $3 extra per shift because he has few trips. A driver with many short trips in the city might get an additional $10-15.

Since the increased price is small on any one trip, just fifty cents higher, customers may not perceive it as a significant increase. In that case, there is reason for optimism that most of the fare increase may actually materialize as additional revenues.



A fifty-cent increase to the initial charge may be better than a 12% fare increase. It will be seen as a small increase and will be less likely to drive customers to competing transport services. A fifty-cent increase will reward radio players for concentrating on short trips in the City. It will not increase mileage and waiting time charges, nor will it cause nickel amounts to appear on the meter.




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A third proposal:
Increase the flag by 90 cents and double the distance

A better way to accomplish a fifty-cent increase is to increase the initial distance to 2/5 of a mile, and increase the initial charge to $3.40.

The new rate would be:

$3.40 for the first 2/5 mile or 120 seconds of wait time, and

$0.40 for each additional 1/5 mile ($2.00 per mile) or 60 seconds of waiting time ($24.00 per hour).

The charts reveal that there is almost no difference bewteen this proposal and the previous one. Its advantage is that a customer may perceive additional value in the increased initial mileage. Our current initial distance is too short at 1/5 mile because very few trips are that short. It's better to merge the first "tick" into the initial charge and point to the increased initial distance as a selling point.



A less immediately obvious benefit of using this approach is that it gets SF on track for a more sophisticated fare structure utilizing multiple intervals of time and distance. There is a tendency to shy away from the slightly more complex arithmetic involved, but it has been put to good use in other places, notably London. SF should abandon the very restricted rate formulas of the past, which have used just a single intervals of distance such as the current 1/5 mile.

After increasing the initial distance to 2/5 mile, our next step ought to be adding a third interval, 1/10 mile that would apply after 15 miles. It would substitute a London-style "clock and a half" rate for our current "meter and a half" surcharge. The long distance surcharge would appear on the meter instead of off-meter as happens now. It would increase the number of long trips by removing the current large sticker shock that happens at 15.01 miles.




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This was SF fare talks of last year...Comments??? e-mail me at trose@cox.net