Monday, 17 March 2014

Jitney supply restrictions

Police in Dunedin helped the TaxiCab Federation enforce its entry barriers this past weekend, warning jitneys helping drunks get home.
Police have visited 46 of the 60 drivers identified as illegally offering cheap taxi rides via social media. The drivers received official warnings.

Many claimed they were unaware they were breaking the law, Dunedin road policing manager Senior Sergeant Phil McDouall said.

The Facebook page, ''Dunedin Sober Drivers'', had nearly 2500 members, and detailed those wanting or offering rides to and from destinations.

A 21-year-old female, who regularly used the service, told the Otago Daily Times members provided a safe and cheap alternative to taxis, which were expensive and not readily available in the early hours.

''They do this in other places. I just don't see what the problem is.''
Taxi cabs come under regulations requiring 24-hour dispatch and in-cab cameras; drivers of any commercial passenger vehicle, whether taxi or chartered limo, must have a passenger endorsement on the driver's licence. The passenger endorsement requires sitting an extensive local knowledge test, which is largely superseded by Google Maps, Apple phones, and dozens of models of dedicated GPS units.
Police had safety concerns for vulnerable passengers, including young women and those under the influence of alcohol who might be getting into vehicles with people they didn't know, he said.

The ongoing investigation involving police and the New Zealand Transport Agency (NZTA) comes after concerns were raised by Dunedin taxi drivers.
So it is ok for a drunk young woman to choose a free ride home with a guy she met at the bar, who may or may not be a horrible person, but it's absolutely forbidden for her to engage in an identical commercial transaction unless the driver is a licensed cabbie in a licensed cab. Yes, I know that commercial transactions generally have higher regulatory hurdles than identical 'for free' ones. But the entry barriers here seem higher than they need be.

Here's a description of the local knowledge tests. It costs about $380 for test and study guide.

I can see great reasons for airports putting up great big signs saying something like:
Drivers from the following cab companies only use licensed drivers; their licensed drivers gave passed a local knowledge test. Others cabs may rely solely on GPS.
But making it mandatory for all drivers? Sounds more like a way of restricting supply. A lot of the time, the passengers will be checking the route on their GPS anyway, and especially so in Auckland, where the absolute lack of any logical direct route from the airport to downtown always makes it feel like you're being shafted with unnecessary suburban detours even when you're not.

Or, imagine it this way. Were taxicabs a brand new thing that nobody had ever heard of before, and everybody knew about GPS, would we expect that regulations on taxi drivers would require passing a local knowledge test, or would they require instead that the driver have GPS and an internet-enabled phone allowing for address lookups? Surely this is the kind of thing best handled through brand reputation. If your cab company charges less but has clueless drivers, people will only hire you for routes they know; if your drivers know the best way to everywhere, folks needing that will pay the premium for it.

While I agree that having a knowledgeable driver is a good thing, not all good things should be mandatory. I can't see why it's necessary for drivers offering folks a ride home at the end of the night to have passed local knowledge tests that include where various churches are.


  1. "If your cab company charges less but has clueless drivers, people will only hire you for routes they know; if your drivers know the best way to everywhere, folks needing that will pay the premium for it."

    I agree with almost all of this post, apart from the above quote. People who don't know the route they wish to travel are probably highly correlated with people who don't know anything about the local cab companies (think tourists), so there is the potential for an information based market failure here.

    Of course, access to GPS can help resolve that market failure.

  2. This is a great point. The situation seems exacerbated by an ability of cab drivers to differentiate between tourists and locals, so a yelp-like reputation system may be ineffective.

    Clients could just tell the cab driver to follow the GPS route on the client's phone, but part of the value a cab driver can provide is in being better than a GPS at choosing routes, ether due to short term anomalies in the road network or bugs in the GPS system.

    Does anyone care to speculate how could the market allow tourists to trust cab drivers to use their knowledge to override the GPS when appropriate?

  3. All we really need is a big sign at the airport saying which cab companies use only drivers who have passed the local knowledge test. That would catch the vast majority of tourists. Then it's up to them.

  4. It's not just about possessing local knowledge, it's also about using it honestly.

    It seems in everyone's interest (except the tourist) for the taxi company to pay the airport to put their name on the "We're knowledgeable and honest " sign, then take tourists on dishonest(roundabout) routes.

  5. Status quo: all drivers are supposed to have passed a knowledge test. These drivers might nevertheless take tourists on dishonest and roundabout routes.

    My proposal: The local knowledge test be optional, with cab companies certainly be free to advertise at the airport that they only use drivers who have passed the local knowledge test. They'd be subject to standard truth-in-advertising restrictions requiring that, if they say they only used licensed drivers, that that be true. But, as is the case now, there remains no guarantee that the drivers will not take tourists on roundabout routes.

    Your critique: Drivers under my proposal may take dishonest and roundabout routes.