Carpooling regulations

Over at UAE community blog Seabee outlines the hoops that Dubai government Roads and Transport Authority have created in order to carpool legally. The plain if nontransparent reason for these regulations is to protect the government's monopoly in public transport - both bus and taxi.

Dubai is not the only government that protects taxis. Check out these examples to be found at Carpe Diem.

For earlier posts on taxis, and taxi regulation in the Dubai and the UAE click the label "taxis" to this post.

Is that clear?

Dubai authorities are taking notice of the value of carpooling for reducing traffic congestion. But they remain hesitant. They fear, I think, it would be too successful if it was unregulated. Allowing money to might change hands to share expenses or even to compensate the driver for his or her time would encourage carpooling. And compete with the taxis which are government owned. Thus, there must be a carpooling system. The invisible hand is not to be trusted.

Gulf News reports

Regulations for car pooling are being finalised and will be announced soon, said a senior official.
...
He said that "pooling a car" for monetary gain is illegal but sharing a car with colleagues going to the same location is allowed.
...
He said the RTA is considering to introduce system allowing motorists to register their cars to be used for "car pooling service". However, he said that motorists using their cars as illegal taxis are fined at least Dh2,000.

More on those illegal taxis

Recently I wrote about the illegal taxis operating in Dubai. Illegal taxis operate in many big cities in New York, Seoul and Buenos Aires. At Dulles airport outside Washington you are warned not to take rides from people who approach you.

Back in 1997 John Tierney wrote a very nice piece for NYT Magazine on illegal taxi vans operating in New York (Times Select). Here are few extracts:

Vincent Cummins looks out from his van with the wary eyes of a hardened criminal. It is quiet this evening in downtown Brooklyn . . . too quiet.
...
He looks left and right. No police cars in sight. None of the usual unmarked cars, either. Cummins pauses for a second -- he has heard on the C.B. that cops have just busted two other drivers -- but he can't stop himself.
...
Five seconds later, evil triumphs. A middle-aged woman with a shopping bag climbs into the van . . . and Cummins drives off with impunity! His new victim and the other passengers laugh when asked why they're riding this illegal jitney. What fool would pay $1.50 to stand on the bus or subway when you're guaranteed a seat here for $1? Unlike bus drivers, the van drivers make change and accept bills, and the vans run more frequently at every hour of the day. ''It takes me an hour to get home if I use the bus,'' explains Cynthia Peters, a nurse born in Trinidad. ''When I'm working late, it's very scary waiting in the dark for the bus and then walking the three blocks home. With Vincent's van, I get home in less than half an hour. He takes me right to the door and waits until I get inside.''

Some of Tierney's analysis

The van drivers have refuted two modern urban myths: that mass transit must lose money and that it must be a public enterprise. Entrepreneurs like Cummins are thriving today in other cities -- Seoul and Buenos Aires rely entirely on private, profitable bus companies -- and they once made New York the world leader in mass transit. The first horsecars and elevated trains were developed here by private companies. The first subway was partly financed with a loan from the city, but it was otherwise a private operation, built and run quite profitably with the fare set at a nickel -- the equivalent of less than a dollar today.

The whole article is worth reading. It's reprinted in Mankiw's Principles of Economics 4e (look in right column under self promotion).

And if you are not a Times Select subscriber can become one free if you have an edu email address. Here's how.

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.

Taxis seized for running illegal inter-emirate service :: Gulf News

People are often surprised that there are UAE nationals who drive taxis.

Several of the emirates have created monopolies for national drivers. For example, the only taxis that can pick up from Sharjah Airport are national drivers. The government sets a flat fare for these drivers. The drivers cannot hire someone in their place.

Today's Gulf News has another example:

Ras Al Khaimah: Police patrols have seized three city taxis for illegally offering passengers trips to other emirates. The seized taxis will be impounded for a week and fines will be imposed on the drivers, a senior police officer at the Ras Al Khaimah Traffic and Licensing Department said yesterday.

He said the taxis were caught on Al Jazera Al Hamara Highway while taking passengers to Dubai during iftar. The drivers were trying to exploit fewer police patrols on the road during that time, he said. The officer said only national drivers from the emirate's Taxi Stand were authorised to take passengers to other emirates.

Taxi drivers from the stand have been complaining against the city taxis and several private cars running illegal services to Dubai, Sharjah, Ajman and Umm Al Quwain for cheaper rates. The Ras Al Khaimah municipality has fixed the fare at Dh20 per passenger at the Taxi Stand. The officer said passengers are attracted to the illegal city taxis and private cars that offer cheaper fares for the same trips.

Sharjah taxi fares up :: KT

Dubai and Sharjah taxis have raised fares. Not surprising given the 35% increase in petrol prices.

Quote:

Following in the footsteps of Dubai Transport Corporation (DTC), the Sharjah Transport Corporation (STC), too, has decided to adjust taximeters, effecting an increase of 10 per cent in the fare. Speaking to Khaleej Times, an STC official said that Dh1 would now be levied after every 800 metres instead of the earlier 900 metres. "The decision will be implemented in a few days time," he said, and confirmed that there would be no change in the starting fare, which would continue to be Dh2.

More:

"Drivers who refuse to take passengers to their desired destination are fined between Dh100 and 200," he said, adding that, at present, the corporation had 2000 drivers.

Why would drivers refuse to take passengers to their desired destination? If the driver is not compensated entirely by salary, but shares in the revenue or net revenue the driver would decline to take a passenger to a time-consuming destination or a destination where he or she is not likely to find another find another fare. (One case of the latter is the restriction the emirates have on taxis from one emirate picking up fares in another emirate.)

Put yourself in the shoes of such a driver asked to contend with this.

Oman petrol stations shut taps for Al Ain taxis :: GN

OmanOil has tired of the cross border arbitrage brought about by the substantial difference in petrol prices in the UAE and Oman. Pegging its price below the UAE price was draining its coffers. UAE taxis will no longer be allowed to buy in Oman.

Ironically, the lucrative illegal export of incredibly cheap petrol from Iran into the northern Omani province of Musandam continues.

Arbitrage

The Khaleej Times reports:

Al Ain residents are making a beeline to Buraimi, the border town of the Sultanate of Oman, saving Dh15 on a tank full.

UPDATE: MORE. The Gulf News reports:

Motorists have been clogging the main Buraimi-Al Ain road, and Omani police had to intervene to restore traffic flow several times. "We had to close down our station for three hours on police request for the restoration of traffic on the road," said Joseph George, manager of an Omanoil Petrol Station in Buraimi.

Fuel prices have increased by 30 per cent in the UAE. Fuel prices in Buraimi are still unchanged and a large number of motorists have been going there to buy petrol at a cheaper rate.
. . .
"We have been operating round the clock and have so far sold about 33,000 gallons of petrol from this station which is just a few hundred feet across the UAE border," he said.

Petrol stations in Buraimi have been getting extra supplies from Muscat, about 350km away from Buraimi, to meet the the increased demand. "We don't have any problem with the supply as who have told to pick up as much of the business as we can," said George.
. . .
A majority of these motorists are taxi drivers who are upset by the price hike. They say fuel prices have gone up but the authorities have not increased the taxi fare in Abu Dhabi emirate for the last 20 years.

Female taxi drivers :: GN

Quoting:

"When it started people on the road saw it as something unusual,” says Ammar Bin Tamim, Dubai Transport Corporation’s Director of Administration. “At first we were afraid to have women driving at night.”

But five years on DTC’s women cabbies have clocked up substantial cultural adjustment. From the launch team of seven, who all pulled up at 10pm, the service has grown to 30 drivers and a full 24-7 coverage.
. . .
“A lot of customers take pictures of us,” says Amira. “One woman sent a photograph of me back to her husband, who thought women had a restricted life here. She said it would show him that Dubai is a modern place.”

Taxis refuse to take passengers at peak times :: Gulf News

The price of congestion:

"Just recently, I stopped over five taxis in Al Ghusais. When I mentioned the word Sharjah, the driver slammed the door shut and left. Some offered to drop me as far as the border of Dubai-Sharjah, by Al Mulla Plaza, but no further."

R. Joby, who lives in Dubai, said: "Most of the taxi drivers in Dubai are reluctant to take passengers to the busy areas. Recently, we waited in vain for over two hours for a cab. Later, we went home on a bus."

"When I inquired with a driver why it was difficult to get a taxi, he said he preferred to drive on roads, which would fetch him more money and where there are fewer traffic jams."

In a city that is "unwalkable".

Let's grab a cab to the United States :: MSNBC.com


Hungry for freedom

Recently the Gulf News floated the idea of a water taxi between Sharjah and Dubai. This is not what came to mind.

Bargain-the-fare Sharjah taxis going the way of the dodo bird - Khaleej Times

“The metered taxis are a new concept in Sharjah, so people are quite critical of the fare. In fact, it is much cheaper than the private taxis where the charge is Dh5 even for a short distance. Besides, there is no bargaining. The difference will soon be evident to the people,” Habibullah said.

He said the drivers’ conduct with passengers would also be much better than private taxi drivers. “Our drivers undergo a three-week training course at the company and another week at STC before they obtain a taxi driving permit. All drivers are paid on a commission basis,” Razak said.

“The metered taxis are a new concept in Sharjah, so people are quite critical of the fare. In fact, it is much cheaper than the private taxis where the charge is Dh5 even for a short distance. Besides, there is no bargaining. The difference will soon be evident to the people,” Habibullah said.
He said the drivers’ conduct with passengers would also be much better than private taxi drivers. “Our drivers undergo a three-week training course at the company and another week at STC before they obtain a taxi driving permit. All drivers are paid on a commission basis,” Razak said.

Another slice of life on the frontier bites the dust.

Competition is good - Gulf News: "Private taxis operating between Abu Dhabi and Dubai have reduced their fares from Dh25 to Dh15 per person following the introduction of Emirates Express. The joint public transport venture by Dubai and Abu Dhabi Municipalities was launched on March 15 to provide luxurious but cheap public transport. The one-way fare between Abu Dhabi and Dubai is Dh15, the cheapest of all other modes of transport including sharing taxis. According to taxi drivers, they were forced to reduce fares to stay competitive with the bus service."

Those not living in the UAE may not understand why there is so much demand for intercity public transportation. Mostly the answer is that 80% of us are non-nationals and many of those have income so low they choose not to own a car.

And who are the taxi drivers? Expatriates [thanks to Acad for correction], most of whom pay an annual fee to their employer-sponsor, pay to run their taxi and keep all the revenue above these costs.

Taxi service is an interesting education in languages. Most drivers speak Urdu. When the passenger does not speak Urdu the communication, such as it is, between driver and passenger is in English (even if neither speaks English well). English is the common denominator. A friend once arranged for a taxi to come and drive him to the airport 3 hours ahead of time. The driver, "communicating" on his mobile phone with my friend for an hour never did find his apartment. Communication breakdown. And that was after numbers where put on the apartment buildings.

I recently called a cab. After he was on campus I phoned him on his mobile. Where are you I asked. "I am in parking." Yes, I said, but there are 16 parking lots; which one? "I am in parking, I see a building." Doloop 5X. I finally set out on foot to find him.

Water-taxis to beat traffic on Dubai-Sharjah roads - Gulf News

I've often wondered, why not?

Studies on the water-taxi project are scheduled to be completed by the end of this year, and the service will likely be operational early next year.

More women take to driving cabs in Fujairah - Gulf News

QUOTE."I used to get a monthly cash assistance from the association to help support my retired husband and five children. Three months ago, I got my new driver's licence and decided to drive a taxi to pick up female passengers, just like the other woman cabbies in Fujairah," Raeesa said.

"Needy UAE national families are being urged to be productive rather than wait for assistance. The service also benefits our local community by introducing women cabbies who can pick up women passengers," Ahmad Saeed Mattar, assistant director of the Association for Administrative and Financial Affairs, told Gulf News.
UNQUOTE

June 2000: Female cabbies begin work in Dubai - AP

Company director Mohammad Obaid Al Mulla said government-owned DTC had been flooded with requests from women customers who did not want to be driven by men.

_____
Female taxi driver, Dubai

The seven drivers had to overcome family opposition and cultural prejudices before they were able to break into the male-dominated field. There have been no complaints from the conservative segments of the society, however, apparently because only women customers will be using the cabs.

"My husband's family said this was no job for a woman. They said it was better for me to stay home and take care of the kids. But I insisted and my husband supported me," said Mohammed, a 35-year-old mother of six.

Actual Saudization of cabbie sector never exceeded one percent - Arab News

As posted earlier, Saudi Arabia will not reach 100% Saudization of taxi drivers by the target date. Now comes more details:

The replacement of foreign taxi drivers with Saudis was originally planned to have been completed by the beginning of 2005. Minister of Labor Ghazi Al-Gosaibi has now admitted the plan faltered because of the “irregularities and twisted tactics” that accompanied its enforcement. He said Saudization did not exceed 8 percent according to official figures, while in reality the actual figure is no more than 1 percent.
...
Irregularities he cited included some taxi companies registering cars with their licenses showing the drivers were Saudis while in fact the cars remained grounded and never used.

Yes, if a way to beat the system exists, economic incentives will always find it.

Saudi cab drivers are now unhappy:

The drivers complained of the losses they said they continued to incur as a result of the unfair competition from expatriate drivers.

...

The drivers said the ministry’s decision to postpone the replacement of foreign drivers came as a shock to them. They said the continued presence of large numbers of foreign drivers would only cause them more losses. They described the ministry’s move as a reward for taxi companies which they accused of dragging their feet on Saudization.

Unfair competition -- or just competition? Just competition. Losses -- using economic costs? Perhaps so, since Saudis are not willing to accept the low pay that non-Saudis are accepting. One thing is correct about the current Saudi drivers' analysis of the economics. They have been harmed by the ministry's delay. The fewer ex pat drivers there are, the fewer low-cost producers there will be, the higher the incomes of Saudi drivers. And the more attractive the business becomes to other Saudis.

As the earlier post (below) shows, though, customers prefer non Saudi drivers. As long as that is true they will have more time without a passenger than ex pat drivers. Ouch.

Saudi Cab Drivers harmed by their own rights - Arab News

A Saudi woman once told me Saudization of taxis would never work because a Saudi woman would never ride in a taxi driven by a Saudi man. I asked, stupidly, then wouldn't that mean there'd be demand for taxis driven by Saudi women. In Saudi Arabia, of course, women cannot drive. Which is the reason the taxi business is so big -- and makes a tempting target for Saudization. At any rate, I was too embarrassed to follow up with why. Now I've found the answer (emphasis added):

But amid the hue and cry of the Saudi drivers who want the ministry to smooth out the bumps in the road, for some reason, many of the customers prefer the foreign drivers.

"Most of the time, we dress in foreign clothes just to look like foreigners in order to get customers," said Al-Sulaimi.

Apparently, many women are pleased that the ministry slowed down the pace of Saudization in this field. "I make it a point not to get into a taxi if the driver is Saudi because I don't trust them," said Zahra Ahmadi. "Three years is not long enough to change mentalities that have been around for ages. I depend on taxis. So what is this? More obstacles to keep us home?"

More:

Umm Fahd, a mother of three, said there was a time when she could trust a driver because he was Saudi. He knew the boundaries of decency and knew that if he made a wrong a move, his family or tribe would hear about it. “That was a different generation,” she said. “The younger generation of men does not know a thing. I say this as one who has run into bad situations with Saudi taxi drivers — I’m no flirty tart of a woman giggling in the back seat.”

Some said Saudi taxi drivers are more prone to propositioning their female customers, playing romantic music and acting 'cute.' "I avoid using taxis with Saudi drivers,” said Ola Nasser. “That’s because of the ogling they do in the mirror. They think you are loose and out there for the taking just because you are taking a taxi.”

As to the reason for my headline?

Several women said that one of the reasons they preferred non-Saudi limo-drivers is that if and when there was a customer complaint there was more chance for justice taking place against a foreign driver than against a Saudi driver.

One for more the "rights can make you worse off" files. Earlier installments can be found here and here - each of these are cases of businesses refusing to rent durables to nationals because they fear they will have no legal recourse if there is damage.

Note, the behavior of a few leads to a stereotype of all, and reinforces the self-selection of bad men into the taxi business.

Last thought. When there is a customer complaint against them, do the Saudi drivers dressed "to look like foreigners in order to get customers" get treated like foreigners or like Saudis?

Limousine Saudization Put on Hold for 3 Years - Arab News

JEDDAH, 12 February 2005 — A dearth of Saudi drivers has forced the government to further postpone full nationalization of limousine business from Feb. 10.

Does it surprise you that Saudi Arabia is resorting to creating jobs for nationals in the taxi industry?

Unemployment amongst nationals in Saudi Arabia is high (estimated to be as high as 35 percent). Or is it? What do you call it when there are jobs but no one takes them?

It's common in this part of the world for the government to announce one thing and then later say, well, that's not going to happen. I'm not sure why. A conjecture I have is that autocracies act first and think later (about feasibility and unintended consequences), and are capable of quicker mid-course corrections. And just because you have an autocracy doesn't mean you can snap your fingers and it can and will be done -- but when you've got the power there's an impulse to act like you do. Or maybe it's that autocracies don't have a good way of foreseeing how the public will react to a policy innovation because there isn't an open deliberation before the attempt to implement. Maybe there's a lesson here for autocratic styles of leadership in organizations.