Thursday, August 30, 2007

Illegal taxis benefit the public at the expense of "public transportation"

The headline is mine. Gulf News reports,
The Franchise and Performance Control Section at the Agency has launched a new campaign to increase awareness on various categories of illegal ferrying of passengers in Dubai. The practice is inflicting heavy losses on the public transport sector, officials said.

"Statistics gathered from a series of field campaigns between 2004 and July 2007 show the practice of illegal taxis is rampant in virtually all areas of Dubai. It is particularly acute in some locations of Dubai well known to both the offenders and the passengers, but rarely does it take place by the sides of the main thoroughfares," Al Mulla [Mohammad Obaid Al Mulla, CEO of Public Transport Agency at the Roads and Transport Authority (RTA)] said.
Why not go the other direction and legalize competition? Consumers now are saying they prefer the unauthorized taxis, and legalization would only make taxi services even less expensive. But that would be more direct competition for the government taxi monopoly.

Perhaps the concern is that the proliferation of taxis adds to the congestion problem in Dubai. But that's not the justification is giving for cracking down on the illegal taxis.

UPDATE, 31 Aug, Gulf News editiorial
But knowing these risks, some commuters still prefer to hire illegal taxis, so there must be a reason for it. Possibly it is that charges for metered taxis are considered high, and with the ever-increasing costs in Dubai, people look to save a few dirhams or more.

Also, even with over 4,000 registered legal taxis in Dubai, it is insufficient to meet passengers' needs at most times of the day or night. Waiting for the call centre to answer and then for the taxi to arrive can sometimes take well over an hour, precious time exacerbated in hot weather. The answer has to lie in the RTA providing a better public transport system than present.
Could it be that RTA is restricting the quantitied supplied just as any monopolist would?

The irony is that in the larger scheme of things Dubai, Inc. could be even more profitable if it opened up the taxi industry to competition. Afterall, Dubai has become The Place because its economy is so open relative other economies in the region. Lowering the cost of transportation would translate into a fall in the cost of living and lead to a further expansion of the success of Dubai. Government sanctioned monopolization is a short-sighted temptation that has been the bane of many societies.

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