Why do black cabs cost more than Concorde?

Concorde could fly you to New York and back faster than a speeding bullet – with a glass of champagne and bragging rights to boot – for 83p per mile (about £1 per mile adjusted for inflation). The common-or-garden Hackney cab may cost about five times as much (for example, Heathrow to Warren Street is 17.9 miles and can cost £84 = £4.69/mile). Indeed, a one-way trip in a black cab from Heathrow to Fitzrovia may cost more than a return flight to Vienna on a budget airline. This is the result of market-distorting preferential rules.

Hackney cab drivers inexplicably enjoy a rule stating that no one else can describe a taxi service as a “taxi” in their marketing, and the important restriction that no one else can pick up passengers on the street. These regulations have deep historical foundations, dating back to the days of Dick Turpin. In today’s world, they are anachronistic, anti-competitive and pointless.

When there are price comparison sites for insurance, airlines, hotels, holidays and office supplies, where we can buy the same product from a myriad of suppliers at different prices, how is it that there are very strict rules requiring that Hackney drivers receive a minimum wage for every mile driven yet private hire drivers do not? Why is it good for certain stripes of taxi driver to be able to oblige people in London to pay higher rates than the market would support if such a law was not in place?  

Why do the same drivers, who expect to be able to choose what clothes they wear (and how much they pay for them) and which airlines and car insurance firms they use, want to deny travellers in London the basic freedom to choose another vehicle service they can hail at the airport or on the street?

If people want to pay for the superior knowledge that the Hackney drivers clearly possess, they will do so. If they do not care, they will find cheaper alternatives until the market has informed the black-cab community what customers really think and what price they are willing to pay.

Many people are disgusted with the special treatment bankers received, but through the price controls and regulations on taxis in London, transport markets are being distorted to favour one type of vehicle provider.

I am afraid I disagree. While they are indeed ridiculously expensive (through forced pricing set by City Hall, not the cab drivers) there is one element that you have not cited. Nowehere in the world is there a taxi service that insists on the same rigorous training and nowhere in the world therefore offers drivers with the same encyclopedic knowledge of the streets they ply. Few areas of public life have seen such rigorous standards maintained and I am all for paying to keep these up. Any trip to a foreign capital city will provide ample tangible evidence to argue for the status quo in London.

Suppose London cabbies received such sensational training that they were able to conduct a conversation in ancient Greek with their passengers. Of course this would require incredibly expensive tuition, which would ‘have to be’ reflected in the fares they charged. Why on earth should passengers who were (or would be) quite happy with just English be required to pay for this? Let the market work.

OH – nobody should stop a company offering drivers with the standards of qualifications that black taxi drivers currently have. The question is whether others should be allowed into the market too. People (especially individuals who pay for themselves rather than travel on expenses) simply cannot get a decent service at all because they have to walk or travel by tube as a result of the high fares.

With taxi deregulation a wide range of private transport services could develop, as seen in many cities in SE Asia and Africa. There could be low-cost shared taxis serving a wider range of destinations than buses, as well as high-speed motorbike ‘taxis’ (where you jump on the back of the motorbike and are taken rapidly to your destination). The elderly and infirm would probably benefit most from proper competition in local transport – they would no longer have to struggle with heavy shopping on the bus, for example.

We could also have taxi brands with well-developed brand identities, so that before hailing a particular taxi, we would have a fair idea of what we can expect. Let’s say there’d be “Terravision Taxis”: expect the driver to be a bit disoriented and not especially fluent in English, but you get to your destination eventually and cheaply.
No reason why the black-cab-brand should not be able to remain a market leader.

Interesting article, and one which deserves further thought. And may I just say that you haven’t even superficially touched on some of the more protectionist areas of legislation applicable to black cabs. For example, if they tried to submit their vehicles to the same tests applied to private hire companies for disabled transport, every black cab in London would be deemed ‘illegal’.

Have to disagree.
Travel to NYC, Chicago, LA and ask yourself if the london policy is better or worse for everyone involved. Prices would drive down quality, and all that will happen is that you will need additional regulation to manage an impoverished and corrupt network of marginal businesses that deliver cheap but intolerable service that prevents quality competition from competing in the market.
If you are willing to spend money on the tube. You have no argument about spending money to maintain a quality system of taxis. Just because market mechanics are POSSIBLE for taxis and IMPOSSIBLE for tubes, that doesn’t mean that taxis are not serving the same function as tubes.

Curt – not sure that I completely understand your point: maybe a few typos. But what you say does not happen in Dublin – indeed precisely the opposite happened. If you are going to assume that quality will be driven down you at least need an a priori argument to demonstrate why. What is the argument?

PhilipMy point is that we subsidize transportation in multiple ways for multiple reasons. Due to the character limit of this blog, it’s not possible to answer a question such as this sufficiently because there you are making too many assumptions (I think).Aristotle would have surveyed all the major cities before pronouncing the opinion you offer. Such a survey would indicate that Dublin is an outlier. Since Dublin is an outlier, why is it that such a thing has NOT happened in Dublin? Induction is a very error-prone technology.(RE: typos. iphone/ipad auto correction and screen size make the confusion between a period and comma an easy one. Apologies.)I’ll post a reply elsewhere.

Reply posted herehttp://www.capitalismv3.com/index.php/2010/04/iea-thinks-taxis-are-not-a-public-good/comment-page-1/#comment-69

“Creating Price Diversity”Curt,
Do you not think some sort of free market exchange would actually serve this purpose rather well? Where people could decide on which service/quality mix they wanted and pay accordingly? Where the protection to any supplier is afforded only by being excellent at what they do rather than by “special treatment”.

@KrisI like your take on “Terravision” taxis. This is a great point. Black Cab drivers will always find people willing to pay for the superior service and knowhow, but the point is, people should not be forced to pay, by law, a specific amount to the Black Cab operator. Some Hackney Drivers have brand new cabs, others have far older (and some cases, not particularly salubrious) vehicles. They should be able to offer whichever prices they feel people will bear.

@Curt,Are you aware what happened in the airline market, when more competition was allowed? First Class did not disappear did it?
More choice was created and people who valued the First Class service continued to pay for it.

Not all taxi drivers work in London. London is a special case but, since hackney drivers take 2 - 4 years to learn the knowledge I think thats ok, plus they are told what vehicle to drive. In the sticks it seems a little diferent. Although a private hire car cannot be flagged down it does have a meter, where I work (Hinckley), but all meters are regulated by the local council. There can be no real competitiveness except that of excellance, punctuality etc. The only other area is that of the quoted fare, rather than the metered fair. The quote MUST be no more than the meter. For instance, the company flag I drive under charges £38 to both Birmingham and EastMidlands Airports yet it meters at £56 ! Others may charge diferently. The authorities tell us how old a vehicle can be, we have two tests a year where a stone chip can cause us to fail and have to spend money, our meters have gone up twice in the last 7 years whereas fuel has risen in price every week, the council put up their fees, need i go on? It seems to me that taxi drivers exist to serve the financial needs of the council cos I am currently earning just £180 per week on average. Just last tuesday I worked ten hours for the grand sum of £32...............and YOU WANT TO DEREGULATE THE INDUSTRY TO BRING DOWN PRICES? get a life, if you want to travel in a taxi then be prepared to pay the price and stop whinging.
Steve Robinson, I enjoyed your post but it does not address the fact that black cabs operate a cartel which everybody else, directly or indirectly, pays for. The article states that a black cab from Heathrow to the Warren Street is £84, clearly a massive uplift in the real cost of providing such a service, and a terrible first impression for foreign visitors to England. This outrageous cost is only tolerated as people's choices are restricted by the government's rules, no doubt kept in place by cabbies' special pleading. The system is skewed mostly to the benefit of taxi drivers; opening up the market to real competition would be positive. Driving a cab can at best be described as semi-skilled work. Technology ie. satnav, has largely made redundant the need for such intensive training for London cab drivers ie. 'doing the knowledge'; this increases the cost for users of taxis for little or no benefit. If you are only earning £32 for 10 hours work (I suspect most of that time was not spent actually 'working' in the truest sense of the word), then why not take your own advice? If you want to earn more, be prepared to invest time and money in bettering your skillset and finding higher paid work. And stop whinging.
Nonsense. I am a London black taxi driver and I pick up regularly from Heathrow. The fare from Heathrow to Warren street depending on traffic conditions should be approximately 65-70 pounds. We have three different meter tariffs depending on the time of day. Our highest tariff the night-rate 3 is 3pounds and 80p per mile, where did you get the 4 pounds 69p per mile from? London taxi fares are set by Transport for London and reflect the very high costs of running a taxi e.g a brand new taxi can cost up to forty thousand pounds. London taxi fares are often distorted higher by the appalling traffic problems in London e.g badly planned, long running roadworks, demonstrations etc. These traffic problems hinder economic growth and should be addressed by the 'Institute for Economic Affairs'
Fran ThePlank, thanks for reading my little retort. I must put you right on some things. As I said, not all cabbies live or work in London. I am in Hinckley. We have similar stupid rules to those in London. Cabbies have to put up with this. I have an honours degree. I did the local knowledge. I have now done the necessary NVQ, and when you say I was not working in the truest sense of the word, what exactly do you mean? I was in my cab for ten hours. If nobody wishes to employ my services then, like any other self-employed person, there is not much more I can do. They know the phone number, they know the rank. I am in the cab so am therefore working, if not earning. Im not whinging, Im giving you facts. The guy who started this was whinging about having to pay the price of a black cab in London. There are many ways of travelling, especially in London.......tube, bus, taxi, private hire, rickshaw, bicycle, motorcycle and of course good old fashioned walking ! So many choices. You pay your money you take your choice. Some people though want a firstclass service for a second class fare. Get real, get a life. I feel better now, thanks for letting me let off steam...........something IM not permitted to do when a passenger starts giving me the verbal abuse.
But who are the ones who earn more?

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