Abstract
One of Bangkok’s most perennial problems was the misbehaviour of taxi drivers. In only 4 months, from October 2015 to January 2016, the Department of Land Transport under the Ministry of Transport (MOT) of Thailand received almost 15,000 complaints regarding the quality of services provided by Bangkok’s taxi drivers. The number one complaint was passenger refusal. Anybody taking a taxi, particularly during rush hour, was likely to get frustrated with some taxi drivers, who got flagged down but refused to go to the requested destinations. Several attempts had been made by the MOT to resolve the issue of taxi drivers refusing passengers, including imposing fines and suspending taxi drivers, allowing fare raise to improve taxi drivers’ well-being, hoping to provide higher quality services and to abide by the laws and regulations. So far, the results had been unsatisfactory. This case aims to show the beauty and usefulness of real options in real-world applications by looking at one of Bangkok’s most perennial problems of taxi drivers refusing passengers. A real option is a powerful framework for business, finance and economic decisions. Not only that, but it is also a versatile tool for resolving social issues.
The meeting room was silent for an awkward few minutes, as nobody felt like he or she had anything promising enough to say in response to the director’s pressing question: ‘What can we do to dramatically reduce the number of service refusals by taxi drivers?’ Just several days prior to this meeting, Mr Sanith Phromwong, the Director of the Department of Land Transport (DLT), gave a press release reporting that during the first 4 months of the 2016 fiscal year (October 2016 to January 2017) the DLT had received more than 18,000 complaints about public transports, out of which 12,900 were about taxi services (Thairath Online, 2017). These numbers, if compared to the previous year’s numbers of 19,727 total complaints and 14,912 complaints about taxis, showed a slight improvement, but were still far from ideal (Udomkalayalux, 2016).
The number one reason for complaints throughout these years had always been service refusals by taxi drivers, especially in Bangkok. Despite a new regulation that increased the fine on taxi drivers refusing passengers’ ride requests and despite upward adjustments to the taxi fare structure, it was still not uncommon for commuters to find themselves rejected by flagged-down taxi drivers after telling them where they wanted to go. Mr Sanith decided to hold a department meeting on this ongoing issue again, hoping to hear some revolutionary ideas. But the meeting generated no promising solutions. Emphasizing the fact that in 2 weeks the department needed to provide a set of actionable steps for solving the problem to Mr Arkhom Termpittayapaisith, the Minister of Transport, the question was reiterated, only to witness avoidance of direct eye contact.
Bangkok Traffic and Taxis
As the capital of Thailand, Bangkok was the largest city in the country in terms of population. In 2016, there were 5.7 million registered residents in Bangkok. However, it was estimated that as many as 8.3 million people were actually living in Bangkok, and if those commuting to the city from nearby provinces during the day were included, the population could be as large as 14–15 million. This meant more than 20 per cent of the total population of Thailand (65.7 million) stayed in Bangkok each day (World Population Review, 2017). In terms of area, Bangkok was actually among the smallest cities in Thailand, with only 1,567 km 2 , making it the most densely populated city in the country with 3,600 people/km 2 (based on registered residents only).
Bangkok was named the second most congested city in the world based on its traffic jams—after Mexico City. TomTom’s traffic index indicated that on average Bangkok’s traffic moved 57 per cent slower than it could in a clear-road situation. This additional time was as much as 85 per cent during morning peak hours and 114 per cent during evening peak hours (TomTom, 2017) (see Figure 1.1 and 1.2 for typical traffic conditions during rush hours in Bangkok). To avoid stressful driving conditions, many people turned to other means of transportation such as subways, sky trains, buses, vans, boats, tuk-tuks, 1 motorbikes and taxis. However, given the current development level of the city, most public transportation systems were not very extensive (see Figure 2 for public transportation network in Bangkok). Hence, many Bangkokians who lived and worked far from the stations or stops could not rely much upon them. This made taxis almost the only convenient 2 choice for those who needed to go somewhere off the public transportation grid but did not want to drive. As a result, more than two million trips were made by taxis on a daily basis (Auto Media, 2017).
1.1 Traffic during a Monday’s morning rush hour
1.2 Traffic during a Monday’s evening rush hour
Disclaimer: This image is for representational purposes only. It may not appear well in print.
There were more than a 100,000 taxis in Bangkok, about 80 per cent of which operated under a legal entity (companies and cooperatives); the other 20 per cent were privately-owned (Prachachat Online, 2013). In the past, the company-owned or cooperative taxis were typically painted in one colour with a symbol painted in another colour. These colour combinations represented different owners as legally recognized by the DLT. For example, yellow taxis with a green symbol were owned by Samakkeetham cooperative. Blue taxis with a white symbol belonged to Thai Taxi cooperative. Pink taxis with a white symbol were from Sahamit cooperative. However, the DLT later required all the company-owned and cooperative taxis registered after 1 April 2008 to be painted in yellow with a blue symbol only. Privately owned taxis had long been recognized by their green-yellow paint on the body. The DLT limited taxi ownership to no more than one taxi per person (Grandprix.co.th, 2018).
Getting a taxi ride in Bangkok could be done by just flagging down a taxi passing by. While this practice was supposedly timely, as there were so many taxis running around in the city, many passengers found themselves frustratingly spending a significant amount of time flagging down a number of taxis who stopped but refused to go to their intended destinations. This gave rise to the increasing popularity of some smartphone applications like Uber and Grab, where the users could send their ride requests to many taxi drivers all at once, and would eventually be picked up by someone who was willing to provide the service. These applications, however, typically cost more than a flagged-down taxi fare and could also take a long time for a taxi driver to accept the request and arrive to pick up the summoning person. Hence, flagging down remained the most common approach to get a taxi ride in Bangkok.
The Work Life of Taxi Drivers
Driving a taxi might not be viewed as a dream job for some people. But according to Mr Udom, 42, a Bangkok taxi driver from Roi Et, it offered a decent quality of life: ‘Driving taxi is very flexible and can earn a decent pay.
3
I can go to work whenever I like. I am my own boss. Since Bangkok is very hot with very bad traffic, working in an air-conditioned car is nice!’ The story could be slightly different for the taxi drivers who did not own a car because they would need to rent it from a taxi company. In this case, the cars would be with the drivers for only a specific period of time, for example, 4:00
A Bangkok taxi driver could expect to serve about 10–15 rides and earn around ฿1,200–1,500 from a full 10–12 working hours per day. 4 In December 2014, the DLT revised the taxi fare structure to help increase the earnings of taxi drivers and to, hopefully, also improve the quality of taxi services, in particular, to reduce the number of service refusal incidents. With this change, the initial fare remained the same as before at ฿35, but the charge on the distance and time of the trip was slightly increased. After the first kilometre, the passenger would be charged a progressive rate on the distance: starting from ฿5.50/km in the first 1–10 km, ฿6.50/km for the next 10–20 km, ฿7.50/km for the next 20–40 km, ฿8.00/km for the next 40–60 km, ฿9.00/km for the next 60–80 km and ฿10.50/km afterwards. When the car could not move at its regular speed (e.g., when caught in traffic jams), there was a charge of ฿2.00/min (see Figure 3.1 and 3.2 for the taxi fare structure before and after this revision).
3.1 Revised taxi fare structure after December 13, 2014
3.2 Taxi fare structure prior to December 13, 2014
Each day, taxi drivers had to earn enough to support their operating expenses, which typically totalled to around ฿900–950 for a full service day of 10–12 h. The expense breakdown was as follows (Suvarnabhumi Taxi Cooperative, 2017):
Car rental: ฿500–600 per 10- to 12-h shift, or car loan instalment of ฿500–600 per day Fuel expense: (liquefied petroleum gas [LPG] for most cars, but some used natural gas for vehicles [NGV]) ฿200–300 per day Food and other personal expenses at ฿120 per day Car cleaning ฿30
About 80 per cent of taxi drivers had to rent their cars; only 20 per cent owned their cars, but many still had to pay for the loan instalment of about the same amount of ฿500–600 per day. The drivers had to pay for the rent or loan instalment, regardless of how many trips they made in a day. In terms of fuel, most taxis relied upon LPG, the same type as cooking fuel, due to the fact that it was easy to find LPG gas stations in Bangkok. The LPG price had increased gradually from ฿8.05/l in 2003 to ฿9.79/l in 2008 and remained fixed at about ฿9.79/l for several years. The LPG price then sharply increased to ฿11.21/l in 2012, causing widespread opposition from taxi drivers, as this would have resulted in an increase in their fuel expense of around ฿200 per day. 5 The LPG price kept rising to ฿12.62/l in 2015 before dropping to ฿11.32/l in 2016 (see Figure 4). Due to these LPG price fluctuations, some drivers decided to switch from using LPG to using natural gas for vehicles (NGV). However, it turned out to be very inconvenient for them as there were not as many NGV gas stations as there were LPG gas stations in Bangkok.
At the end of the day, most taxi drivers were left with about ฿250–500, depending on their ‘luck’ that day. It was a common knowledge among taxi drivers that giving a ride to foreigners would earn them more money, mainly because of the additional tips foreigners often paid, which were culturally uncommon among Thai passengers. Hence, getting flagged down by foreigners was considered lucky. On the other hand, there were certain destinations or routes which was perceived as ‘no-goes’ during certain times for most taxi drivers. Any taxi driver who got flagged-down and had to give a ride to such a destination considered it a bad luck.
With uncertain earnings, on top of the high risks of traffic accidents and even criminal passengers, many taxi drivers strongly felt they should be able to select which ride requests to fulfil in order to maximize their earnings and make a decent living from their work. Passengers and the DLT, on the other hand, strongly felt the opposite, that is, that taxi drivers should provide the expected quality of ride service to be able to make a decent living as taxi drivers. Consequently, taxi’s service refusals had been declared illegal under the Land Transport Act, 1979.
Service Refusals and the Common Excuses
Most experienced taxi drivers (that is, those who had been driving for at least several months) would form their preferences among different types of ride requests, based on the expected time the rides would take and the expected earnings they could get. They knew for a fact that certain areas in Bangkok had particularly heavy traffic during certain hours. Whenever the requested trip involved these areas, they knew it would take painfully long to get through or to escape from the traffic after the trip was completed. For the same distance (or the same fare) being made, the traveling time in such a situation could get doubled or even tripled. For instance, a 15 km trip from Bangkok’s Central Business District (CBD) area (i.e., Ratchadapisek Rd. and Rama IX Rd.) to the residential area in Bangkapi would take up to 1.5 h in the evening rush hour; whereas, it would only take around 30–40 min at other times (see Figure 5.1 for an evening rush-hour trip and Figure 5.2 for a morning off-peak-hour trip). Because ‘time is money’, taxi drivers preferred to spend their valuable time on routes where they could earn more for their time. Hence, it was very tempting for taxi drivers to refuse some passengers’ ride requests, despite being forbidden by law, hoping to get the next passenger whose trip would be more profitable to take. This temptation was amplified also because the taxi drivers observed that not every passenger would report to the DLT when their requests were rejected. In fact, although the frequency of situations in which a driver had been reported and fined for service refusals had never been researched or recorded, it was believed to be quite low. If reported, however, the penalty would be ฿1,000 for the first offense, which some observers believed might not be severe enough to fend off this strategic behaviour.
Staying within the city centre zone, such as Sukhumvit, Ekkamai and Siam Square; however, was deemed desirable by taxi drivers—despite the day–night heavy traffic—due to the convenience of getting the next passengers, one after the other. For example, from Ekkamai to Siam Square, it would take around 20–60 minutes for only 6 km (see Figure 6 for a 6 km trip from Ekkamai to Siam Square). However, these areas were usually highly populated and surrounded by offices, hotels, shopping centres and entertainment complexes. Hence, taxi drivers operating in these areas were unlikely to run their cars without passengers for long, as it would only take a blink of an eye to find the next passenger. Moreover, staying in these areas helped to select passengers strategically because there was a large pool of them with a variety of destinations. The drivers could choose to remain in the area or go to the destinations the drivers wanted to go to (e.g., close to where they had to return cars at the end of the shift). Better yet, many passengers in these areas were foreigners who often paid big tips for the services they received. Some foreigners might even want to go outside of Bangkok (e.g., to other tourist destinations like Pattaya), and taxi drivers loved this because they could negotiate a high fixed fare (higher than a metered fare) for a single trip (approximately ฿1,200 fixed fare to Pattaya, compared to a typical ฿900 metered fare) which would cover their typical earnings for the entire day.
According to one taxi driver, he served around ten to fifteen trips a day and strategically refused passengers about five to six times a day. This undesirable strategic behaviour of taxi drivers had been perennial and had caused frustration in the public for years. There were around 100,000 taxis in Bangkok. If each of them refused passengers, say three times a day on average, there would be 300,000 occurrences for a given day. Thus, it was not uncommon at all for a passenger to take 15–30 minutes to get a taxi who agreed to take the requested trip to an undesirable destination. Some commuters might face this frustration every single day if they were unfortunate enough to have their homes labelled by a taxi as a ‘no-go’ destination. Hence, these commuters preferred to get around by BTS (sky train) or MRT (subway) trains whenever possible, but it was not always convenient to travel between the closest stations and their homes. Motorcycles, even though they went faster on packed streets than cars, was not an option for commuters who carried a large or heavy bag or worried about road safety. ‘The ability of the government to enforce the laws and regulations on this taxi misbehaviour as well as the cleanliness and politeness of taxis would dramatically improve the quality of life of Bangkok commuters’, remarked one passenger, who was asked to describe her number one complaint about taxi service in the nation’s capital.
5.1 A ride taking place during an evening rush hour on a Wednesday
5.2 A ride taking place during a morning off-peak hour on a Wednesday
Disclaimer: This image is for representational purposes only. It may not appear well in print.
From a taxi driver’s point of view, the story was different. A taxi driver tried to justify the strategic service refusal, venting it out on a Facebook page titled ‘Voice of Taxis’, which supposedly provided a space for a group of taxi drivers to voice their opinions on various issues, including service refusals: ‘Rather than blaming taxis on deploying this strategy, the public should look into the root causes of this behaviour. Taxi drivers do not refuse the passengers—they refuse some of the passengers’ trips.’ Backed up by other taxi drivers, he then continued with the complaint that in his opinion, the law treated people unfairly: if passengers could refuse a taxi or left the taxi stranded alone in the heavy traffic before arriving at the originally requested destination, taxi drivers should be allowed to refuse the services as well. This post was subsequently severely criticized by many passengers for what the critics deemed its flawed logic and selfish intention. Moreover, many taxi drivers claimed that the taxi fare did not cover the cost of running taxis in heavy traffic or sparsely populated areas when it would take much longer time to earn the same amount which they would otherwise earn within a short period of time in other areas. Refusing service was not an option for taxi drivers; they had no alternative to doing so, in spite of knowing that service refusals were a violation of the law. Taxi drivers would not earn enough money for a living if they did not refuse some trips. ‘The government should increase the taxi fare,’ argued the driver (Suvarnabhumi Taxi Cooperative, 2017).
While the passenger community could understand the difficulties taxi drivers had to incur in their work life related to low fares and long stressful work hours, they still felt like taking passengers to their requested destinations was such a fundamental principle to which taxi drivers should adhere as service providers—more precisely as taxi ‘drivers’. Many passengers argued that they would be completely OK to not flag down or to be rejected by any taxis with a sign ‘out of service’ or with the ‘available’ sign turned off. What upset them the most was when a taxi driver did stop the car when flagged down, but after hearing where the passengers wanted to go, the driver just gave them some flimsy excuses for not going, like ‘My shift is almost over. I have to go the other direction to return my car;’ ‘I’m almost out of gas!’ or ‘I have to do some urgent errands somewhere else.’ The passengers’ bottom line argument was that the taxi drivers who could not commit to serving passengers should just quit their jobs and do something else for a living.
Listening to both sides of the arguments, the DLT had identified the three most common causes (or excuses) that prompted taxi drivers to refuse passengers:
The drivers were not willing to go to/through heavy traffic areas. That would get much worse during rush hours. The requested destinations were so far from a well-populated area such that it would take significantly more time to find the next passenger. The requested destinations were too short a distance, say less than ฿50, and not in the direction taxi drivers wanted to go or moving towards the directions where it got more difficult to find the next passenger (e.g., away from the main streets into a narrow alley).
Remedies to the Problem
The DLT had not been idle on the issue of taxis’ service refusals. There had been several attempts to alleviate the situation. A direct approach was to impose a fine on the taxi drivers who had been reported for refusing to provide services to passengers after being flagged down. The Road Traffic Act 1979, Section 93, clearly stated that taxi drivers were not allowed to refuse passengers’ ride requests unless the rides were likely to lead to danger to the taxi drivers or the passengers. If the taxi drivers intended to not take any rides at any given time, the drivers must make it explicit by putting up a sign (The Road Traffic Act, 1979). The fine for taxis’ service refusals used to be up to ฿500 (approximately US$14). However, in early 2016, the DLT had increased the fine to ฿1,000, along with mandatory participation in a 3-h training session provided by the DLT, if it was the driver’s first offense. If the driver was reported twice, his or her taxi license would be suspended. Soon after that, a new regulation was implemented, there were more than 3,700 reports of taxis’ service refusals during a course of 10 days—most took place in Bangkok’s city centre (Thairath Online, 2016). To help increase the effectiveness of this regulation, the DLT offered convenient ways for passengers to report taxis’ service refusals including a 24/7 call centre, online forms and emails. The DLT promised to notify the reporters of the outcome within 7 days.
Some observers of the problem argued that imposing a penalty might not prevent lawbreakers if the problem was caused by necessity rather than opportunistic taking. If the problem was economic in its nature, they averred, then perhaps it would be more rational to solve it with economic tools, that is, revising the taxi fare structure and reducing the fuel and car rental expenses. Back in May 2013, a group of taxi drivers had proposed to the government that an increase in fare was necessary to get rid of this long-standing problem. They recommended an increase in the initial fare from 35 THB to 40 THB for the reason that it had not been revised for several years. They also asked for an upward adjustment to the charge per distance and time (The Chat Room, 2013). In response, the DLT announced a revised fare structure in December 2014, which was meticulously designed to help resolve the taxi service refusal problem (see Figure 3.1).
The new fare structure had been in use for over 2 years already. But the number of reported taxis’ service refusals had decreased only marginally. At the same time, voices of taxi drivers requesting additional fare increases and reduction in fuel prices were continuous over the years.
What Else Can Be Done?
The silence in the meeting room was quite frustrating for everyone as no one could come up with some new ideas given that a number of attempts had already been implemented. The key question though was ‘Why did these attempts not solve the problem to a large extent?’ The DLT director pondered whether he and his team had overlooked some important factors that could drive the effectiveness of these mechanisms. Should they revise the fine regulation and fare structure? Or should they come up with a completely new idea? He did not come up with the answer right away. ‘Why don’t we call it a day?’ the meeting chair finally broke the silence. To audible sighs of relief from the assemblage, he intoned, ‘Let’s come back and talk about this next week.’ ‘By then,’ he continued, ‘I want to hear some brilliant ideas from all of you.’ He then exited the room to a barely audible chorus of worried mumbles.
Declaration of Conflicting Interests
The authors declared no potential conflicts of interest with respect to the research, authorship and/or publication of this case.
Funding
This work was supported by research funding from NIDA Business School, National Institute of Development Administration (NIDA).