Hail To New Taxis

Hail To New Taxis

Sydney Morning Herald

Monday September 25, 2006

IT IS that extra sting in the tail for frustrated taxi passengers. On top of the fare and the GST, there is a 10 per cent surcharge just for the pleasure of paying by credit or debit card, or by Cabcharge voucher. Surely the minimal effort of running the plastic through the in-vehicle EFTPOS system - or the much smaller cut credit card companies take - cannot justify such an extravagant fee. But Cabcharge, which owns Taxis Combined, enjoys a near-monopoly in the Sydney market and monopolists do not usually have to worry too much about what customers think. Except, of course, if the customer is Macquarie Bank, which spends about $5 million a year on cabs for its employees, a potential $500,000 in surcharges going Cabcharge's way. Macquarie's solution: challenge Cabcharge on its own turf. Following the launch of its wheelchair-accessible cab company, Lime Taxis, earlier this year Macquarie Bank plans to have a rival taxi fleet on the road within 12 months, with a rival voucher system to match.

Monopolies in any sector hurt consumers on price and service. Regular business travellers know only too well that the wait for a taxi at Sydney Airport can feel almost as long as the flight. Macquarie Bank has the resources to put real competition in to the Sydney taxi market, which should push surcharges down and service up. In June the Australian Competition Tribunal revoked a special authorisation held by Cabcharge, meaning taxi drivers can now choose alternative payment systems. Cabcharge has warned Macquarie that the tough Sydney taxi market is far removed from the "rarified atmosphere of merchant banking". But the potential of a new fleet to shake up that market is obvious: Cabcharge earned $403.1 million of its $431 million half-yearly revenue from its payment system.

That said, Macquarie Bank is hardly the champion of the little guy railing against big business. One of the bank's largest listed funds, Macquarie Airports, controls Sydney Airport, where it has been accused by the major airlines and the competition tribunal of abusing its monopoly power. Since Macquarie took control in 2002 service fees and prices have risen considerably. The decision to axe the pick-up zone outside the domestic airport - forcing drivers into expensive parking - has especially infuriated passengers, who can hardly opt to use another airport facility. Some Cabcharge directors believe Macquarie now aims to build a fleet big enough to tie up all the lucrative jobs to and from Sydney Airport. But so long as all taxi companies continue to enjoy fair access to airport ranks, Macquarie's ultimate ambitions are irrelevant. That is healthy competition.