Budapest cabbies want 10% fare hike - It would be closer to 20% in fact

The President of the National Association of Taxi Drivers told mfor.hu on Monday that the hike is necessitated by the raise to the minimum wage, which is an odd explanation.

Our experience is that demand for passenger transport has jumped as a result of the minimum wage hike. Taxi drivers, however, can meet the gradually rising demand only if they keep developing their services. This, as everything else, comes at a price, though

, said Zoltán Metál.Then the taxi drivers leapt into action. On Tuesday, Chairman of the BKIK’s transport department announced they would ask the municipality’s approval for a 10% hike. This suggests that we are witnessing an orchestrated manoeuvre. But let’s see what that fare hike would consist of:

• The fare per kilometre would be raised to HUF 320 from the current HUF 280, which would correspond to a 14.3% hike.
• The fare per minute would be raised to HUF 80 from HUF 70, which would also be a 14.3% hike.
• The base fare would be HUF 600 instead of HUF 450 currently, which would be a 33% (!) raise.

You don’t need to be Albert Einstein to see that the three items above do not add up to a 10% hike. The actual fare increase would be 15% at least. Those hailing a cab for short trips would be the worst off, as a result. But let’s see a few concrete examples!

• If you get a cab for a two-kilometre trip which takes five minutes, you pay HUF 1,360 now. After the hike, it will cost you HUF 1,640, which would equal a 20.6% increase.
• Let’s say a five-kilometre trip takes ten minutes. The current fare of HUF 2,550 would go up to HUF 3,000 a 17.6% increase.
• A 10-km trip taking 20 minutes would cost HUF 5,400 if the proposals are approved versus HUF 4,650 currently, which would correspond to a 16.1% increase.

So, what’s the point talking about a 10% hike when in fact it would be a lot more? Well, a 10% raise sounds better, doesn’t it? Ten percent is a psychological threshold so to speak. It’s easier to “sell", especially when wages go up by more than 10%. This way they can argue that taxi rides would still be cheaper in a real terms, only they wouldn’t.

I’m for the raise. There are a lot of short trips in general, especially in the downtown area, one or two kilometres

, a driver at City Taxi, who asked to remain anonymous, told Portfolio on Wednesday.

He noted that about 60% of the rides are ordered by companies and hotels, and the fare hike would not put them in the grave.

“There are a lot of companies among our customers, and they would not mind higher fares as much as “regular" passengers."

The rationale behind the planned hike is hogwash too (see our opinion above). BKIK Chairman László Krisán argued for the move by highlighting labour shortage and the low profitability of tax companies. He failed to elaborate, however, on how exactly labour shortage affects taxi drivers who are self-employed, while new drivers are reportedly queuing up to enter the market.

Additionally, fuel prices have decreased palpably since the current fares were set in 2013. At that time a litre of motor fuel was over HUF 400 per litre, while prices are around HUF 350 at present. The mandatory developments (POS terminals, high technical standards, etc.) had been prescribed already by the 2013 taxi regulation, these must-dos were used as the explanation for the current tariffs.

In other words, the planned fare hike may be objected for two reasons. Firstly, it is a lie that fares would be raised only by 10%. Secondly, there is no sound justification for the hike at all. Finally, Viktor Zsiday, Portfolio Manager of Concorde Asset Management and Chairman of asset management company Plotinus, has recently posted in his blog that local taxi fares are significantly high in regional comparison, and compared to wages they are the highest among all capital cities in the region.

We are not the enemies of cabbies, though. And in order to prove that we make a fair offer for them: Go ahead and raise your fares by 50%! Make only a single commitment in return! Promise to let Uber back on the streets of Budapest.

What about the costs of taxi drivers?

Our source, who works for City Taxi, listed the following fixed costs:

• HUF 50,000 KATA (small business tax) per month for self-employed drivers.
• HUF 70,000-75,000 tax obligation per month for not self-employed drivers.
• HUF 80,000-81,000 monthly membership fee for City Taxi (HUF 100,000 at Főtaxi, no such fee for freelancers).
• HUF 65,000 + VAT annual fee for using taxi stands. The permit requires strict annual car inspections by the Budapest Transport Centre (BKK), including the seamless operation of POS terminals, A/C and other technical features.
• HUF 20,000-40,000 for annual vehicle inspection (stricter for taxis than for “regular" car owners).
• Mandatory use of winter tyres between 1 December and 15 March. (The starting price four new tyres is around HUF 100,000.)
• HUF 1,900 monthly fee for using the mandatory online cash register.

Front page photo by Attila Kovács /MTI

• Tags:
• taxi,
• economy,
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• cabbie