Fuel price increase affects taxi companies

  • 1999-08-19
RIGA/TALLINN (BNS) - Latvian taxi companies reported experiencing difficulties because of the increase in fuel prices. Their profits are falling because the rise in fuel costs is not compensated by an increase in revenue: the number of people using taxi services is not increasing.

Riga Taxi director, Juris Balabka, said that Riga City Council had either to increase the rates for commercial carriage of passengers or to allow taxi companies to set those rates themselves. The chairman of the company's board of directors, Genadijs Aksjonovs, said that Riga Taxi applied to the Riga transport committee with a request to abolish the single rate law.

"Nowhere else except Riga is there a single taxi rate. Taking into account the competitiveness in the area, as well as differences in the provided services, taxi companies must be able to set their rates themselves, just as it happens in the rest of the world," Aksjonovs said.

This will not necessarily mean a rise in taxi prices, he claimed. "While several taxi companies, such as Riga Taxi, would be interested in putting their rates up, I think that other companies, which use older cars, would be more interested in cutting their prices."

Rigas Taksometru Parks Board Chairman Leopolds Muiznieks said that the current charges for taxi services were optimal and referred to the company's experience which showed that no growth of profit could be achieved through higher rates as part of the potential customers would then cease using taxis.

The director of another taxi company, Vejins, Janis Ozolins said that Riga City Council should raise taxi rates to 40 santims ($0.68) per kilometer if fuel prices grow to 40 santims per liter. This would follow the time tested practice of setting the price per kilometer equal to the cost of a liter of petrol.

In Estonia, where taxi companies have the opportunity to set their own rates, no increase in prices is expected any time soon. Major taxi companies in Tallinn do not, as yet, intend to raise fares in response to the latest gas price hike; in their opinion, the fare per kilometer needs to be raised when the gas price approaches 10 kroons ($0.69)per liter.

Allan Kottis, deputy director of Lin-natakso, said the firm anticipated the fuel price hike and already raised the fare to six kroons per kilometer at the end of last year.

Lind, Tulika Takso director, stated that taxi companies will soon face a forced move. If the fare per kilometer should as a rule equal the price of a liter of gas, then taxi companies are nevertheless not going to raise the fare to eight kroons, he said.

Lind also said Tulika Takso buys fuel for its own filling station wholesale and it costs drivers about 0.40 kroons less than the going rate.