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The Honourable Harry Lali

Minister of Transportation and Highways

Parliament Buildings

Victoria, B. C. V8V 1X4

Dear Minister:

Attached please find the results of the study commissioned by you on the taxi industry in

British Columbia.

The study team has, over the past four months, met with both industry and consumers as

well as regulatory bodies. We have participated in forums sponsored by the B.C. Taxi

Association and the Vancouver Taxi Association, and have held regional meetings in

Kamloops, Prince George and Victoria. We have also held consultations with the Motor

Carrier Commission, the Insurance Corporation of British Columbia, and municipal

governments and transit authorities. A more detailed list of our consultations is attached as

Appendix C of the Report.

We hope that our work is the beginning of a process that leads to enhanced stability within

the industry and enhanced service to the public.

We appreciate being given an opportunity to conduct this review and trust that you will

find the results satisfactory.

Sincerely,

Stan Lanyon, Q.C.

Chair, Taxi Review Panel

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Table of Contents

ACKNOWLEDGEMENTS

METHODOLOGY

EXECUTIVE SUMMARY OF RECOMMENDATIONS

Recommendations

INDUSTRY OVERVIEW

Regulations and Jurisdiction

Company Structure

Drivers’Conditions of Employment

Insurance Costs

Vehicle Inspection

Vancouver International Airport

Other Costs to the Industry

Small Companies

Structural Problems

INDUSTRY OBSERVATIONS AND SUBMISSIONS

Territorial Boundaries

Fare Structure

Insurance Rates

Driver Safety

Inspection

Regulation

Costs

Consultation

Subsidized Public Transportation Services

Internal Issues

INTRODUCTION TO THE RECOMMENDATIONS

Regulation versus Deregulation

Aspects of Regulation

Experiments in Deregulation

The Seattle Experience

Survey of Deregulation in American Cities

Summary

The Public Role of the Industry

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ISSUES & RECOMMENDATIONS

I. Financial Condition of the Industry

Fare Increases

Service Innovations

Financial Disclosure

Employment Standards

II. Regulatory Scheme

Single Regulatory Board

Structure and Function of Commission

Advisory Committee

Investigation Report

Reconsideration and “Leave to Appeal”

Members of the Commission

Motor Carrier Commission Resources

Jurisdiction of Commission

Penalties and Enforcement

Incorporation of Utilities Commission’s Powers

Protocol Agreement on Process: Sections 32 and 39

of the Motor Carrier Act

III. Safety and Service Issues

Driver Training and Certification

Services for People with Disabilities

Driver Safety

Vehicle Safety

Inspection and Enforcement

Inspection Facilities

Vehicle Criteria

IV. Other Recommendations

Traffic Flow Issues

Taxi Association

Consumer Protection

Vancouver International Airport

Merit License System

Issues Outside the Scope of this Study

CONCLUSION

BIBLIOGRAPHY

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APPENDICES

A. TERMS OF REFERENCE

B. QUESTIONNAIRES

C. INDUSTRY AND STAKEHOLDER CONSULTATIONS

D. RECOMMENDATIONS OF THE B.C. COALITION OF

PEOPLE WITH DISABILITIES

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ACKNOWLEDGEMENTS

We would like to acknowledge the cooperation and participation of the many individuals

and organizations who assisted in the formulation of this report. In particular we express

our appreciation to the B.C. Taxi Association and the Vancouver Taxi Association both

for their written submissions and for the organizing of forums for the participation of their

members. We also appreciate the help and participation of taxi operators in our regional

meetings in Prince George, Kelowna and Victoria. As well, many individual

representatives of companies, shareholders, owner-operators and drivers took time either

to speak to us in person or to share their experience and expertise through phone

interviews and questionnaires.

We would also like to express our appreciation to the various representatives of the Motor

Carrier Commission (in particular to Colin Hanson), the Insurance Corporation of British

Columbia, the Vancouver International Airport Authority, the Motor Vehicle Branch, the

Greater Vancouver Transit Authority, and BC Transit for their help and information.

We are also grateful for the assistance provided by various municipalities throughout the

province, in particular the City of Vancouver and the City of Surrey who provided us with

a great deal of helpful information.

Our understanding of the issues pertaining to the disabled community were greatly

enhanced by our conversations with both the Coalition of Persons with Disabilities and

Advocates for Sight Impaired Consumers.

This study would not have been possible without the support of staff at the Ministry of

Transportation and Highways, including Claire Dansereau, Associate Deputy Minister;

Linda Foubister, Corporate Policy & Planning Branch; Ian McLeod, Director of

Communications and Sherry Barnes, Secretary.

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To these people and to all the others who gave of their time so freely, our grateful

appreciation.

Taxi Study Panel

Stan Lanyon, Q.C., Chair

John Webb, Technical Advisor

Bonnie Evans, Research and Writing

Peter Seidl, Research

Ministry of Transportation and Highways

Claire Dansereau, Associate Deputy Minister

Linda Foubister, Corporate Policy & Planning Branch

Ian McLeod, Director of Communications

Sherry Barnes, Secretary

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METHODOLOGY

This study was commissioned in December of 1998 by the Honourable Harry Lali,

Minister of Transportation and Highways, to look at the current state of the taxi industry

in British Columbia. Under our terms of reference we were asked to examine the financial

condition of the industry, the regulatory scheme, and the quality of service including issues

of training and safety. We were asked to examine options for resolution of these issues,

and to develop a report and recommendations for the Minister. We were further instructed

to focus on recommendations that would not increase overall costs to the industry.

In compiling the information on which this report and our recommendations are based, we

used a variety of approaches. Individual questionnaires were sent to taxi companies, and

distributed to shareholders, owner/operators and drivers. A separate questionnaire was

sent to hotels, airports and cruise lines who rely on the industry, and another to

municipalities who have both licensing and regulatory jurisdiction. In addition to the

questionnaires, phone surveys were conducted with taxi companies outside the Lower

Mainland and with a significant number of municipalities. Committee members interviewed

members of all Lower Mainland companies and either interviewed or received submissions

and/or questionnaires from approximately 80% of companies who are licensed by the

Motor Carrier Commission outside the Lower Mainland. In addition we were able to

survey by phone a number of companies outside the Lower Mainland who hold municipal

licenses only.

We attended regional forums in Kelowna, Prince George and Victoria, and a provincial

forum sponsored by the B.C. Taxi Association as well as a Vancouver forum sponsored by

the Vancouver Taxi Association. A meeting with Vancouver Airport Taxi Drivers was

arranged with the help of the United Steelworkers, Retail Wholesale Canada. In addition

to the forums we met with representatives of both associations on many occasions and

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interviewed individual drivers as well as owner/operators and shareholders whenever

possible.

We received written submissions from both the Vancouver Taxi Association and the B.C.

Taxi Association as well as from many individuals within the industry who took the time

to send us additional information based on their own extensive experience in the industry.

If there was a weakness in this aspect of our research, it was in our inability to find an

effective way to reach drivers who are neither owner/operators nor shareholders. Those

who did respond gave us interesting and valuable insights, but we acknowledge that there

were many drivers who did not have access to the questionnaires or the forums.

Along with the industry, we consulted extensively with various stakeholder groups

including the Motor Carrier Commission, ICBC, the Greater Vancouver Transit

Authority, the City of Vancouver, the Vancouver Airport Authority, the Coalition for

Persons with Disabilities, and Advocates for Sight Impaired Consumers.

In addition we conducted a literature review that included studies of systems throughout

North America, as well as various reports on general industry issues. In order to

understand the recent history of the taxi industry in B.C., and in particular the Lower

Mainland, we relied on the work done in previous studies for the Greater Vancouver

Regional District and the Motor Carrier Commission, as well as studies of the industry in

other jurisdictions.

Our research materials are listed in the Bibliography. A detailed list of respondents is

contained in Appendix C.

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EXECUTIVE SUMMARY OF RECOMMENDATIONS

Innovation is essential to the continued economic viability of the taxi industry and to its

potential role in public transportation. Improvements must take place in the kinds of

services offered, the types of fees charged, driver training, and the safety of both drivers

and vehicles. As well there must be an improved relationship between regulators, the

industry, and municipal and regional governments.

The services offered to the public must be expanded from the “exclusive ride” concept (in

which one passenger has exclusive use of a vehicle) to include “shared ride” services such

as shuttles, mini-vans and mini-buses, and taxi pools. This will require a corresponding

change to rates structures to enable the industry to provide individual fares, flat fares, and

charter fares in addition to the traditional metered fares. Such innovations will provide the

public with greater accessibility to taxi services at lower costs, and will give the industry

new service venues through which to improve their profitability.

In order to bring about these changes there will need to be closer collaboration among all

stakeholders including the industry, regulatory bodies, municipalities, regional districts,

educators and consumer groups.

The industry must take the lead on the issues of quality and diversity of service, driver

training, and vehicle and driver safety. It must comply with Employment Standards

legislation, and move away from its traditional resistance to change and toward

implementing innovations in service and technology. Where we have found that the

industry is hampered by regulations that impede innovation or encourage unfair

competition, we have recommended change. We have opted for a model of governance

that is more inclusive of all stakeholders, not only within the existing industry, but in a

new relationship that would see the industry integrated into overall public transportation

planning.

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Few of our recommendations require legislative change; most can be accomplished

through changes to regulations. It is only in the area of municipal exemptions, the

reconsideration powers of the Commission, and in the Commission’s ability to impose

penalties that legislative changes to the Motor Carrier Act are necessary.

It was apparent throughout the consultation process that the industry wants change. We

hope these recommendations lay the foundation for an on-going process of evaluation and

innovation that will provide stability to the industry and a high standard of service to the

public.

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Recommendations

I. Financial Condition of the Industry

Fare Increases

1. We recommend a change in the fare structure in order to include a range of fares that

will increase the industry’s flexibility and competitiveness. Metered rates should not

be the only rates allowed. Other rates, such as flat rates, rates for shared rides, and

individual fares should be permissible and prescribed by the Motor Carrier

Commission in order to benefit the industry and to lower costs for consumers.

However, because the industry has had only a 1.7% increase in the last eight years, we

recommend a modest general increase.

2. We further recommend that the Motor Carrier Commission and the industry negotiate

a flat fare rate between the airport and downtown Vancouver.

3. We recommend that there be an automatic review of taxi fares every two years.

4. We further recommend that licensing fees and concession fees be considered as a cost

factor in assessing tariff increases.

Service Innovations

5. In order to allow the industry to move from the “exclusive ride” concept (i.e. a single

individual going to a particular destination) to a more flexible regime that includes

“shared rides,” we recommend that Sections 70 and 71 of the Motor Carrier

Regulations be amended to provide for shared rides and a variety of fares.

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6. We further recommend the inclusion of the taxi industry in the planning of public

transportation. This could include pilot projects to establish the best way to implement

service innovations such as services to seniors or people with disabilities at a lower

cost to consumers.

Financial Disclosure

7. We support the position of the Motor Carrier Commission in Order 70/98 that any

increase in fares be subject to full financial disclosure from all persons falling under the

jurisdiction of the Motor Carrier Act.

8. We further recommend that the industry move toward employing the technologies of

the Global Positioning System (GPS) and metered receipts in order to facilitate

financial accountability (as per Order 70/98 of the Motor Carrier Commission) and

that the costs incurred be offset by a targeted fare increase.

9. We further recommend that the Motor Carrier Commission and the industry work

together to develop standard procedures and documents in order to facilitate this

process of fuller financial disclosure.

Employment Standards

10. We affirm the exceptions to the Employment Standards Act negotiated by the industry

and the government.

11. We recommend that there be periodic and random audits of taxi companies in regard

to employment standards compliance.

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12. We further recommend that those companies found not to be in compliance be barred

from access to the tendering of provincial contracts until they fulfil a period of

compliance from six months to one year.

II. Regulatory Scheme

Single Regulatory Board

13. We recommend that there be a single regulatory Authority for the licensing and

regulation of the taxi industry. We further recommend that the structure of the Motor

Carrier Commission be changed to include a Taxi Division charged with licensing and

regulation as well as policy and planning.

14. In order to establish minimum standards for the industry, we recommend that licensing

through the Motor Carrier Commission be required for all taxis operating in British

Columbia. Thus we recommend that the municipal exemption be deleted from the

definition of “limited passenger vehicle” within the Motor Carrier Act.

15. We further recommend that municipalities continue to be allowed to license and

impose higher standards on those taxis licensed to operate in their jurisdiction.

However, municipal licensing would require the additional approval of the Motor

Carrier Commission.

16. We further recommend that – unless exceptional circumstances exist – no licenses be

issued by the Commission within municipalities without the approval of the affected

municipality.

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Structure and Function of Taxi Division

17. We recommend that an Advisory Committee be established to work with the Taxi

Division on matters of policy and planning. Such a committee should include

representation from the industry, regulatory bodies, municipalities, regional districts

and other stakeholders.

18. We recommend that all applicants for a Motor Carrier Commission license be given a

copy of the investigative report submitted by the Motor Vehicle Department, and that

they have the opportunity to make submissions in regard to that report prior to the

Commission’s decision.

19. We recommend that the “leave to appeal” provisions be deleted.

20. We recommend that the grounds on which an appeal can be made be expanded from

only the issuing of licenses to all Decisions, Orders and Directions of the Motor

Carrier Commission, and that the time respondents have to reply to an appeal be

extended from five to fourteen days.

21. We further recommend that the Reconsideration Panel be integrated into the

Commission, and that the Chairperson have the authority both to set the number of

panel members and to appoint the panel in regard to any particular application for

review.

22. We recommend that a certain number of the members of the Motor Carrier

Commission be appointed directly from the industry and also be representative of

different parts of the province.

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23. We further recommend that representatives from the Greater Vancouver Transit

Authority (TransLink) be appointed to the Commission and be among those members

hearing applications originating in the Lower Mainland.

24. We recommend that the Taxi Division of the Motor Carrier Commission be provided

with the resources necessary to adequately carry out its obligations.

Jurisdiction of Taxi Division of Motor Carrier Commission

Penalties and Enforcement

25. We recommend that the Motor Carrier Commission be given the jurisdiction to

adjudicate violations under its own constituent statute rather than having to rely on the

Courts for prosecution. Thus Section 55(1) should delete the words “on conviction”

and replace them with the following or similar words: “. . . is liable for any such

breach of this Act, Regulations, or Order and the Commission may . . . .”

26. The current maximum penalty under Section 55 is $500.00 for a first violation and

$1,000.00 for a second violation. These amounts are too low to act as a deterrent and

are seen as little more than a cost of doing business. We therefore recommend that the

maximum penalty for a first offence be increased to $5,000 and to $10,000 for a

second offence. The minimum penalties in each case ought to be maintained.

27. We affirm the jurisdiction of the Commission over all vehicles used to provide a taxi

service whether or not they are licensed by the Commission. In order to make this

clear, we recommend that a new Subsection (h) be added to Section 56 and read “(h)

not being a holder of a license under this Act, operates a Motor vehicle at any time

on a highway for the purpose of transporting passengers for compensation.” This

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would entitle the Commission to impose monetary penalties on all unlicensed

operators.

Incorporation of Utilities Commission’s Powers

28. We recommend that the Motor Carrier Act be updated to include a listing of its own

jurisdictional powers rather than being incorporated by reference to the Utilities

Commission Act, R.S.B.C. 1996, c. 473.

Protocol Agreement on Process: Sections 32 and 39 of the Motor Carrier Act

29. There are both overlapping and complementary roles between the Ministry of

Transportation and Highways and the Motor Carrier Commission in the development

of public policy. We therefore recommend that the Ministry of Transportation and

Highways and the Motor Carrier Commission develop a protocol agreement that

outlines their respective roles as they relate to Sections 32 and 39 of the Motor

Carrier Act.

III. Safety and Service Issues

Driver Training and Certification

30. Currently the Justice Institute’s TaxiHost program offers the only standardized

training for taxi drivers. In the Lower Mainland, only taxis operating in the City of

Vancouver or licensed under the Vancouver Airport Authority are obliged to take this

training, and it is not available in other parts of the province. We therefore recommend

that the Advisory Committee expand and enhance the current TaxiHost program.

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31. We further recommend that certification through this program be made mandatory for

all drivers in the province, and that the training be provided in ways that are both

convenient and cost-effective for drivers. (i.e. community colleges throughout the

province).

32. We recommend that a criminal record check be required for driver certification thus

eliminating the need for separate chauffeur’s permits in different jurisdictions.

33. We recommend that the possibility of financial incentives for companies who bear the

cost of training for their drivers be investigated.

34. We further recommend that training be offered for managers and owners of taxi

companies. Such training should focus on issues pertaining to financial accountability,

regulations, legal concerns, employment standards and liability matters.

Services for People with Disabilities

35. We affirm the position of the industry that service to people with disabilities is an

important component of the industry and one that should be expanded. We therefore

recommend that the issues raised by the B.C. Coalition of People with Disabilities in

their submission to this Panel be addressed by the Motor Carrier Commission and the

industry. We specifically recommend that issues of driver training and sensitivity be

addressed as part of the mandatory driver training program (see Appendix D).

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Driver Safety

36. We endorse the recommendations of the Taxi Drivers Task Force. We encourage the

implementation of strategic devices to ensure driver safety including such technologies

as barriers, cameras and lights. We note that the Vancouver Taxi Association is

recommending that taxis be equipped with cameras. We also favour the use of

cameras in taxis, but we recognize the necessity, as stated by the Task Force, for local

decision-making on all aspects of driver safety.

37. We recommend that in cases where safety strategies involve a cost to the company,

such costs be included in a targeted fare increase.

38. We further recommend that a timeline be developed to ensure that safety measures are

in place within the year.

Vehicle Safety

39. In order to enhance public safety while decreasing costs for the industry, we

recommend that the frequency of inspection be increased to every three months from

every six months.

40. We further recommend that an incentive program be put in place whereby a taxi that

passes inspection and is part of an approved preventive maintenance program, may

increase the interval between inspections to six months.

41. We recommend that ICBC review the performance of licensed inspection facilities and

restructure their licensing process to include only those facilities that can ensure

quality of service and uniform standards.

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42. We recommend that an assessment of a vehicle’s fitness for service as a taxi be based

on mileage and condition rather than on the age of the vehicle.

VI. Other Recommendations

Traffic Flow Issues

43. We affirm the right of taxis, with or without passengers, to use HOV lanes.

44. We recommend that taxis be allowed a reasonable amount of time in no-stopping

zones to load and unload customers without being ticketed.

45. We recommend that taxi companies restructure their shift change procedures in order

to ensure an adequate number of vehicles on the road at all times.

Taxi Association

46. We recommend that the Motor Carrier Commission develop a regulation requiring

mandatory membership in a province-wide taxi association for all companies operating

in British Columbia. The structure of the association must allow for regional interests

to be adequately represented. We note that this recommendation in no way precludes

companies from forming additional associations (such as the Vancouver Taxi

Association) to promote their interests.

47. We further recommend that the association be consulted and represented in all

planning and policy decisions.

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48. We further recommend that the association, in conjunction with the Motor Carrier

Commission be given joint responsibility for driver training and certification.

Consumer Protection

49. We recommend that the taxi industry, through their association, develop a standard

Passenger’s Bill of Rights and Responsibilities to be displayed in every vehicle.

50. We recommend the implementation of a comprehensive complaint procedure for

consumers and that the possibility of a complaint line sponsored by ICBC be explored

through the Advisory Committee.

51. We recommend that a standard tag for driver identification be developed. The tag

should include a number unique to the individual driver. The number should be clearly

displayed on the tag and should also be located and displayed at another place within

the vehicle where it is – through the use of Braille or raised lettering – easily accessible

to sight-impaired passengers.

52. We further recommend that all taxis have their company name and car number painted

in a prominent fashion on the exterior of their vehicles.

Vancouver International Airport

53. We recommend to the Vancouver International Airport Authority that they reinstate

“short-trip queues” in order to ensure that drivers can be adequately compensated for

their time at the airport.

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54. We further recommend that the Airport advise the drivers of the timetable for

improvements to drivers’facilities.

Merit License System

55. We recommend that the Motor Carrier Commission reserve a percentage of new

licenses for a merit lottery for drivers who could not otherwise afford to purchase a

license or a share. Such a lottery should include stringent requirements for entry.

56. We further recommend that licenses thus granted be non-transferable and liable to

revocation if the terms of the license are not met, or in the event of retirement or death

of the licensee.

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INDUSTRY OVERVIEW

Regulations and Jurisdiction

The taxi industry plays a significant although often unacknowledged role in British

Columbia’s public transportation sector. Licensing and regulation of this industry occur

primarily under the Motor Carrier Act (MCA)and the Motor Vehicle Act (MVA). There

are three general sets of motor carrier regulations based on these Acts. The Motor Carrier

Regulations (B.C. Reg. 59/59 and 252/94) define types of carriers and various services

including licensing procedures and rules about fares and tariffs. In addition, a portion of

The National Safety Code covers requirements for a range of safety-related issues and the

issuing of certificates (B.C. Reg. 26/25, Division 37). Division 25 of this regulation

provides for vehicle inspection and maintenance requirements.

While the Commission has legislative jurisdiction over motor carriers, the Motor Vehicle

Branch (MVB) is responsible for the implementation and enforcement of the motor carrier

regulations, including safety inspection of vehicles. This function has been transferred to

the Insurance Corporation of British Columbia (ICBC).

Currently 2,400 taxi cabs operating in British Columbia are licensed under the Motor

Carrier Act and Regulations through the B.C. Motor Carrier Commission (MCC). Three

hundred motor carrier authorities have been issued to operate these 2,400 taxis. Of that

number 1,117 or 47% operate in the Lower Mainland. This number includes 386 taxis

that are also licensed by the Vancouver International Airport Authority and have exclusive

rights to pick up passengers at the airport.

In addition to those taxis licensed under the MCC, an undetermined number of taxis

operate throughout the province who are either licensed municipally or in some instances

operate without any regulatory authority at all. As well, a host of alternative services

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including courtesy cars, shuttle services and limousines have encroached on the taxi

industry’s traditional territory. Some of these services are not regulated by the MCC.

Company Structure

The larger taxi companies in the province operate under a shareholder structure. The

company owns the motor carrier authority, or fleet license, with its designated number of

plates, and runs the dispatch service. A single company may have authority to operate 100

cars or more under its license, but those cars are rarely owned by the company. Vehicles

may be registered in the name of the company, but are beneficially owned by the individual

operators. Those beneficial owners are shareholders in the company. The shareholders

elect a Board of Directors who, in turn, hire the general manager who is responsible for

hiring the dispatchers. Shares in the company are not formally traded in a share market

such as the Vancouver Stock Exchange, but are actively traded in a private market.

Notwithstanding the fact that the MCC is required to approve all assignments and

transfers, the Commission’s approval is not sought, and in fact, the Commission receives

no notice that the sale of a share in a license has taken place. Most commonly, each

licensed vehicle supports two shareholders who each own a half-share. The price of shares

is market-driven and therefore varies widely depending on supply and demand. The value

in the Lower Mainland, for example, can range anywhere from a low of $30,000 in

outlying areas to as much as $160,000 for a half share in the restrictive Vancouver market.

In smaller centres in other parts of B.C., a license for one taxi might cost as little as

$6,000 to $7,000.

In addition to shareholders, the company may also lease its plates to an owner-operator

who independently owns a vehicle. Owner-operators pay a set lease fee monthly as well as

dispatch fees to the company. They also have sole responsibility for all incidental costs

related to operating their vehicle including insurance, maintenance, fuel and repairs.

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Generally these owner-operators pay lease fees from $850 to $1,400 per month and

dispatch fees ranging from $525 to $950 per month. The MCC has issued orders that call

into question the appropriateness and/or legality of the leasing of such plates.

Drivers’Conditions of Employment

Drivers who are neither shareholders nor owner-operators generally operate as

sub-contractors to the shareholder. They lease the car on a per shift/week or monthly

basis. Shifts are usually twelve hours and rates can range from a low of $40.00 to a high of

$75.00 per shift depending on location, time of day, and day of the week. Drivers are

responsible for paying their lease rate up front and for fuel costs during their shifts. A slow

shift, mechanical breakdown, or an accident can mean that a driver actually loses money

on a shift, and often even an uneventful shift results in an income below minimum wage.

The taxi industry and the Employment Standards Branch have, over the last two years,

negotiated exceptions from the Employment Standards Act. The exceptions are similar to

those that exist in the trucking industry. B.C. Order-in-Council 1110 (July 30/98), B.C.

Regulation 270/98 exempted the industry from maximum hours of work (Section 35) and

the overtime provisions (Sections 40-42). Taxi drivers may work 60 hours per week with

no daily overtime or time-and-a-half weekly overtime. Double time commences after 60

hours. (The National Safety Code states that drivers are not permitted to work more than

60 hours over a seven day cycle or 80 hours over an eight day cycle). A taxi driver who is

neither an owner-operator nor a shareholder must be paid at least minimum wage for all

hours worked, averaged over a monthly basis. The employer is obligated to “top up”

wages if the driver receives less than the minimum wage from fares. A taxi driver who

leases a vehicle is entitled, averaged over a month, to minimum wage for all hours worked,

and to recover the amount of the lease payment and any other costs associated with the

operation of the taxi including insurance. These standards, in spite of being negotiated

with the industry, are widely ignored.

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Qualifications for drivers are low — generally a Class 4 license and a Chauffeur’s Permit.

Consequently there are always drivers whose local knowledge, communication skills and

driving skills are sub-standard. The establishment of the TaxiHost program, which is

mandatory in Vancouver and for drivers operating at Vancouver International Airport, has

improved but not remedied this situation, and drivers who are not obliged to take the

program have little or no incentive for doing so.

Insurance Costs

All taxis operating in British Columbia are insured through ICBC. They pay anywhere

from $4,000/annum to $12,000/annum for insurance, depending on the region in which

they operate and their driving record. ICBC reports that the taxi industry pays premiums

totaling approximately $12 million dollars per annum. However claims are paid out at a

rate of over $16 million. Premiums have been frozen by the provincial government since

1994 resulting in a net loss to the Corporation of more than $4 million dollars in the last

year alone. The industry disputes these figures and believes that rates are artificially high.

They believe that accident liability is automatically assigned to the taxi in the case of an

accident, thereby driving up their accident liability rates and premiums.

Vehicle Inspection

The area of vehicle inspection and safety is one that is also problematic for the industry. In

earlier days, inspections were done at MVB facilities by MVB inspectors. This function

was privatized and now certified private garages do the inspections and repairs and issue

safety decals. Vehicles must be inspected twice yearly, and any vehicle is subject to

roadside safety checks at any time. The current system is inadequate both in the view of

the industry and from the perspective of public safety. The industry generally complains

that there is no consistency of standards among inspectors and that a system based on

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kilometres rather than vehicle age better reflects the different rates of vehicle usage and

the actual road-worthiness of the vehicle.

Vancouver International Airport

The number of taxis authorized to operate from the Vancouver International Airport has

not changed since the 1980s. The Airport has agreements with nine companies from

various municipalities within the Greater Vancouver Regional District (GVRD). These

agreements date from the time that Transport Canada granted these licenses based on a

lottery system open to all taxi companies in the region. Some companies who opposed the

lottery system boycotted the process, and thus had no standing when Transport Canada

began issuing licenses.

As a result there was a disproportionate number of license representations among those

companies that actually participated in the lottery, and those companies continue to hold

the operating privileges today, as shown in the chart below.

Taxi Company

Municipality (Main)

Number of YVR

Licensed Taxis

Black Top Cabs Ltd.

Vancouver

Bonny’s Taxi Ltd.

Burnaby

Coquitlam Taxi (1977) Ltd.

Coquitlam, Maple Ridge

Delta Sunshine Taxi (1972) Ltd.

Surrey, Delta, Tsawwassen

MacLures Cabs (1984) Ltd.

Vancouver

Richmond Cabs Ltd./ Coral Cabs Ltd. Richmond

Surdell Kennedy Taxi Ltd.

Surrey, Delta

White Rock South Surrey Taxi Ltd.

Surrey, White Rock, Langley

Yellow Cab Company

Vancouver

386

The Airport’s Corps of Commissionaires operates the dispatching of taxis to the public

and administers the rules and regulations governing taxis at the airport. The dispatch

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system will be augmented in 1999 with a new Automated Vehicle Identification System

(AVI) that will allow for the tracking and monitoring of airport licensed vehicles. This

system will allow the airport to precisely pinpoint when a taxi has picked up a passenger

and to identify taxi drivers, matching them to the vehicle and the company.

In 1993, the Airport Authority undertook a comprehensive review of taxi-related issues.

This arose out of numerous customer complaints including that drivers lacked local

knowledge, refused to take short trips, used excessive speed, lacked English language

skills, were discourteous and rude, over-charged, or refused to accept credit cards.

The Airport Authority has moved to address all of these issues, and both taxi drivers and

companies are now being made more accountable. For example, the AVI system will be

able to track both driver and company complaints. In addition, drivers were required to

take the TaxiHost training, Level One, and as of April of this year are required to take

Level Two. In July 1999, the Airport will require that vehicles be no more than nine years

old, and effective January 2000, no car may be more than seven years old. The airport will

also increase the number of cabs, including wheelchair accessible cabs. Finally, fees for

taxi companies have been adjusted to $300 per car per year with a $1.00 fee per trip. The

Authority expects these fees to cover 65% of the Airport’s costs to run the taxi system.

The Airport Authority, along with the City of Vancouver, has provided the province with

leadership in improving the quality of taxi service in B.C. This report builds, in part, on

their initiatives.

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Other Costs to the Industry

In addition to licensing, insurance and vehicle costs, the industry is subjected to a wide

variety of other fees. Aside from the fees charged to Lower Mainland companies at the

Vancouver International Airport, contracts for exclusive service at other airports and

hotels are also costly. The industry is highly competitive and bidding wars over exclusive

rights quickly drives up the price of the contract. At the Victoria airport, for example, the

contract is worth over $200,000.00. Contracts for the hotel rights can cost a company

upwards of $80,000 per annum.

Small Companies

In smaller rural centres around the province, taxi companies are usually one or two-cab

operations in which the taxi owner is also the dispatcher and driver, with much of the

business being conducted via cellular phone or pager. These are often family-run

operations and have few of the organizational problems associated with larger urban

companies. Those small companies who operate under MCC authority sometimes face

competition from non-regulated companies operating under the municipal exemption (or

in some cases outside any regulatory structure). These unregulated companies operate

outside the standards of the Motor Carrier Act which can result in unfair or ruinous

competition for their regulated competitors. Like their peers in urban centres these small

rural companies also face issues of financial instability, insurance rates, and driver and

vehicle safety.

Structural Problems

Within the larger corporate structures in the industry there are inherent organizational

problems that exacerbate distrust and exploitation internally, and make financial

accountability nearly impossible to ensure. The high costs and low profitability of the

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industry increases the incentive for everyone concerned to cut corners and hide income

wherever possible. Drivers have no vested interest in either the mechanical condition of

their vehicles or the financial success of the company. Shareholders have no way of

knowing if drivers are accurately reporting their income, and have no incentive for

rewarding drivers for improved service or skill levels. Company managers are hired by the

shareholders and are therefore limited in their ability to effectively enforce standards

among people who can hire and fire them at will. The low entry-level standards for drivers

ensures that there is always an abundant supply of drivers willing to replace those who

might complain of their treatment. The result paradoxically is an industry that is both over

and under-regulated – a situation that ill serves those within the industry and compromises

the quality of service to the general public.

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INDUSTRY OBSERVATIONS AND SUBMISSIONS

In the course of our study, we received detailed and thoughtful submissions from many

members of the industry. Their issues, while diverse, often cut across urban/rural and

large/small company lines. They included:

Territorial Boundaries

The problems with geographical boundaries are most acute within the Lower Mainland,

but other centres also have problems. Taxi companies in both Whistler and Kelowna

reported competition from companies crossing boundaries in order to operate in their

license area. In the Lower Mainland there are opposing interests. Those companies based

outside of Vancouver clearly would like to see the regulatory structure changed to one of

regional jurisdiction in order to gain access to the lucrative Vancouver market. The

Vancouver companies are adamantly opposed to such a move. The Vancouver Taxi

Association in its submission pointed out: “If the industry is made regional, the

investment made by the Vancouver companies, be they financial or fiduciary, would be

for nothing.” They further argue that the result of opening the Vancouver market would

be to flood the city with too many taxis, while abandoning the suburban areas. This issue,

which is a basic dollars and cents issue, is the primary impediment to the formation of a

single industry-wide association.

Fare Structure

No one in the industry is satisfied with the current fare structure. Both associations

recommend increased fares. In their submission, the Vancouver Taxi Association asked

that fares be adjusted every two years in order to keep up with increases in overhead. The

B.C. Taxi Association suggested that fares be tied to the cost of living index and the needs

of the industry. They further suggested that fare increases be introduced on a regional

basis according to the needs of the industry. They specifically want any costs that are a

result of new government regulation to be covered by a corresponding fare increase.

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While urban taxi companies believed their rates to be too low, there were companies in

rural areas, where distances traveled are apt to be very long, who feel that their fares

structure is too high and only serves to encourage competition from other forms of public

transportation such as shuttle buses. Both associations and their members in the various

forums acknowledged financial disclosure to be a problem in the industry. In their

submission, the B.C. Taxi Association states that “. . . .it is exceedingly difficult to ensure

that accurate financial records are kept by the shareholders/drivers and/or the lease

operators.”

Insurance Rates

Universally the industry complains that ICBC rates are too high. They mistrust ICBC’s

accident statistics for the industry. They claim that any accident involving a taxi is

automatically deemed to be the taxi’s fault no matter what the reality might be. Thus, they

say, their accident rates are unduly inflated leading to an insurance rate that is

unrealistically high. The B.C. Taxi Association wants broader lines of communication

established, and both Associations have requested a review of the rates and policies of the

insurance company.

Driver Safety

The vast majority of drivers responding to the study questionnaire and participating in the

forums said that they had experienced violence while on the job. This finding cuts across

urban and rural lines. Many reported unsatisfactory responses on the part of local law

enforcement agencies, while others questioned the lack of involvement on the part of

Workers’Compensation in ensuring workplace safety. There were several suggestions for

making taxis safer for the drivers including the use of shields, lights, and cameras. The

Vancouver Taxi Association recommends the use of on-board cameras for both customer

and driver safety.

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Inspection

Both drivers and owners are unhappy with the current inspection regime. While they

didn’t take issue with the current regulations, they felt that standards lack any uniformity,

and passing or failing an inspection too often depended on the subjective judgement of an

individual inspector. They felt that inspections should be based on number of kilometres

driven rather than being based on vehicle age. Almost universally they oppose roadside

inspections. Both associations asked for a uniform system and standards of inspection.

Regulation

In general the industry feels that it is over-regulated. It feels there are too many

regulations from too many different sources covering all aspects of the industry. A single

owner-operator, for example, may be expected to comply with overlapping regulations

from municipalities, airports, the Motor Carrier Commission, ICBC, Workers’

Compensation and Employment Standards. The industry would like a single regulatory

body to oversee their industry.

Costs

The high costs of cars, insurance, dispatch fees, training, maintenance and other overhead

costs, combined with regulated fares, means the industry operates on the narrowest of

margins. All participants would like to see some relief in insurance rates, license fees, and

fuel taxes. They would also like their service exempted from the GST which they see as

essentially a 7% fare increase that adversely affects their ridership without providing any

benefit to them.

Consultation

The industry often feels at the mercy of regulatory bodies that make decisions affecting the

industry without consultation. It would like to see an advisory body set up to work with

the major regulators in order to have input on issues such as public transit, driver training

and service standards as well.

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Subsidized Public Transportation Services

We heard many complaints from the industry about heavily subsidized public

transportation that provide service in areas where the taxi industry feels it could easily

provide comparable service at a lower rate. They argue that this would give the industry

more financial stability, and also save taxpayers countless dollars. Handi-Dart was the

primary target of their criticism, both because it operates as a direct competitor to the taxi

industry and because it receives the highest subsidy for its service.

Internal Issues

The industry recognizes that it requires an industry-wide association to adequately

represent its interests. In order to maintain the financial viability and stability of such an

association, many in the industry feel membership should be mandatory. Such an

association could assist not only with representation outside the industry, but also help to

foster an atmosphere of co-operation among the companies within the industry. For

example, the formation and use of one central dispatch in the Lower Mainland for all

Greater Vancouver taxis was an issue that received much attention in our discussions.

Most industry representatives agree that a single central dispatch would help to

dramatically reduce costs to the industry. However they also made it clear that such a

system cannot be put in place until the companies find a way to overcome their inherent

distrust of one another. It may well be that a functioning industry-wide association could

help to ease tensions and allow the companies to work more co-operatively together when

it is in their best interest to do so.

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INTRODUCTION TO THE RECOMMENDATIONS

Regulation versus Deregulation

Aspects of Regulation

There are two forms of taxi regulation – economic regulation and safety regulation.

Economic regulation primarily includes three areas – control of entry (i.e. limitation of the

number of licenses issued), control of fares, and service requirements. Safety regulation

covers vehicle and driver safety. Safety regulation is, for the most part, uncontroversial.

Consumers want to know that the vehicles are safe and the drivers skilled. Even the most

committed of deregulators continue to endorse regulations in regard to vehicle safety and

driver knowledge. Governments try to ensure that vehicles are kept in good mechanical

condition, that the drivers are of good character, and insurance coverage is adequate.

Economic regulation has been treated very differently. In an era when many industries

have undergone deregulation, governments and regulatory bodies on many different levels

believed that the deregulation of the taxi industry would prove a panacea for many of the

problems that dogged the industry. The reality has proved more problematic.

Experiments in Deregulation

Many different jurisdictions have experimented with various degrees of regulation and

deregulation. Those in favour of deregulation argued that it would provide greater entry

into the industry, resulting in increased service and faster response times, and would create

service innovations that would in turn reduce fares. As well, government regulatory costs

would be reduced or eliminated. For the most part jurisdictions where deregulation has

been tried have found that the taxi industry experienced “market failures” or “market

imperfections.” An examination of the actual data shows that, as predicted, there was a

significant increase in new entries. However there was also a decline in operational

efficiency and productivity, an increase in rates, a decline in driver income and a

deterioration in service. Seattle is a case in point.

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The Seattle Experience

In 1979 both the City of Seattle and King County moved from a highly regulated industry

to essentially a free market system for taxis. In theory this would increase the supply of

taxis thereby decreasing wait-times and driving down fares. Seattle found that putting

more taxis on the street did not have the desired effect. Instead, the over-supply of taxis

reduced the earning potential of individual drivers, who responded by increasing fares.

New drivers were untrained and inexperienced which meant that the quality of service

deteriorated. As a result demand fell. The “no show” rate actually increased after

de-regulation.

By the mid-1980s both Seattle and King County began to impose moratoriums on taxi

entries and to set maximum fare rates. Beginning in 1991 and through to 1996, both have

increasingly re-regulated the industry. The impetus for this re-regulation was the concern

expressed by the business and tourism sectors that taxi services were of poor quality and

were a significant detriment to Seattle’s attractiveness as a business and tourism

destination. Nearly two decades after the beginning of Seattle’s experiment with an open

entry system, both the city and King County are still coping with the effects in terms of

service complaints and too many operators. Recognizing their inability to hire sufficient

inspectors to deal with service problems, they opted to increase the levels of

self-enforcement in the industry. All taxis must now belong to associations, and those

associations exercise responsibility for their members.

Survey of Deregulation in American Cities

In 1993 the International Taxi Cab Foundation commissioned an analysis by Price

Waterhouse of the issue of deregulation and re-regulation. Their findings were comparable

to those of Seattle. They reported that while the supply of taxis expanded dramatically

with deregulation, there were only marginal improvements in availability and prices rose in

every instance. At the same time service quality declined – trip refusals increased, there

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was a decline in vehicle age and condition, and the over-supply of taxis resulted in

aggressive passenger solicitation.

The negative aspects of deregulation were especially evident at airports and major tourist

attractions. Deregulation therefore incurred the enmity of the business community and

attracted adverse media coverage.

By 1993, after the widespread deregulation of the industry in the United States during the

l980s, only four of twenty-one cities continued to employ a fully deregulated system.

Those four were primarily among the smaller cities in the group where the impact was less

serious. Cities that had a relatively large population, a high level of airport activity, and

conditions conducive to low-cost market entry tended to have a negative experience. As a

result these cities either fully regulated or partially re-regulated taxi services.

In retrospect, the effects of taxi deregulation have ranged from benign

to adverse, depending on local conditions and markets. There appears to

be scant evidence that deregulation fully achieved the goals on which its

implementation was premised, though some goals clearly were achieved

(e.g. more taxis, less regulatory involvement by government). Market

imperfections peculiar to the taxi industry, including unusual product

supply (e.g. first in, first out queues at cabstands) and consumers’lack

of knowledge of taxi price and quality, tend to negate the improvement

in price and performance associated with deregulation in other

industries. (Price, Waterhouse, 1993, p. 19)

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Summary

Taxis are an essential part of the urban transportation infrastructure and, some would

argue, are in the nature of a public utility. (Indeed, in this province, taxis were once

regulated by the Utilities Commission.) A deregulated market suffers from destructive,

excessive or ruinous competition. It generally has debilitating economic and social

consequences. Not the least of these is its impact on the tourism and business sectors.

Local municipal authorities as well as large institutional consumers like airports and hotels

are particularly sensitive to the tie between taxi service quality and their city’s image and

reputation. Poor treatment of tourists by taxi drivers can tarnish the city’s reputation and

drive away business. Thus, maintaining clean vehicles in good mechanical repair; ensuring

the drivers’skills, character, abilities and knowledge; as well as monitoring issues such as

fares, accurate meters and insurance coverage, all operate in the public interest.

An objective assessment of the evidence forces one to conclude that the cost of taxi

deregulation outweighs its benefits. Paul Steven Dempsey, writing in an article entitled

“Taxi Industry Regulation, De-Regulation and Re-Regulation: Paradox Market Failure” in

the Transportation Law Journal of the College of Law, University of Denver, Volume 24,

No. 1, Summer 1996, concludes:

The fundamental questions are not whether taxis should be regulated,

but how they might best be regulated. That requires careful oversight by

the regulatory body to ensure the appropriate ratio of taxis to

passengers to ensure prompt, safe, and reasonably priced service for

the public, while allowing efficient and well managed firms to earn a

reasonable return on investment.” [emphasis in original] (Dempsey, p.

117)

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As was apparent in the Seattle example, deregulation has had several negative impacts in

jurisdictions where it has been tried, including a mass influx of new operators, lower

profitability and higher fares, and lower service quality. Regulation, however, especially

control of entry, has drawbacks as well. It encourages a market value for licenses which in

turn creates a heavy financial burden for the owner. This can lead to practices that have a

debilitating effect on the industry such as license leasing. The owner becomes more

concerned with protecting the market value of the license than in providing quality service

to the public. This can also mean lower standards of service and increased consumer

complaints.

The Public Role of the Industry

The industry would like its role in the public transportation system recognized. Achieving

such recognition must begin with the industry itself. A code of ethics, driver training,

management training and the adoption of best practices can only help the industry. This

involves not only professional training for all members of the industry, but the

establishment of industry organizations to develop the standardization of services and

innovations. The taxi industry must underscore its public role and make itself known as a

responsible and active partner in the development of public transportation. This is essential

to better transportation planning and to the development of the economy of the province

in sectors such as tourism.

From a public policy standpoint, the current management structure works against the

industry. Public officials repeatedly stated that there is no continuity in the management of

companies and that this has made partnerships with the industry difficult. In addition, taxi

companies often appear indifferent to the management of their employees. Their emphasis

is on the leasing of the vehicle rather than the work habits of the driver. The inability or

unwillingness of a company to exercise control over the drivers has a debilitating effect on

the quality of service, which in turn is a deterrent to public officials considering the

inclusion of the industry in publicly funded transportation programs.

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Thus taxi firms remain outside the planning process and local funding of public

transportation. This is a loss for both the industry and the public. On the other hand,

financial problems facing both transit and taxi operators make this coordination of services

attractive. Traditionally the taxi has primarily provided what has become known as an

“exclusive ride service,” that is a service in which a single individual has exclusive use of

the vehicle for a given period of time. Not surprisingly, the industry and the passenger pay

a price for reserving this vehicle one party at a time. As a public policy alternative it has

great limitations in providing greater public access to transportation. Far greater benefit

would ensue from a system of public and private service providers operating in concert

and using a variety of types of vehicles to provide a better and less costly service.

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ISSUES AND RECOMMENDATIONS

I. Financial Condition of the Industry

Fare Increases

In 1997, the taxi industry applied to the Motor Carrier Commission for a fare rate increase

of 19%. It was their first application since 1991. While they felt a rate increase would have

been justified before 1997, they were reluctant to ask for an increase that might alienate

customers and reduce their ridership in a market where fares were already perceived to be

high. They also cited the introduction of the GST as a factor in delaying their application

until 1997. The tax had a significant impact on the cost of a cab ride, and was, in a sense, a

de facto fare increase – albeit without benefit to the company. The MCC denied the 19%

increase and instead granted a rate increase of 1.7%. The part of their findings that centred

on the issue of financial disclosure is discussed below. Other reasons given by the

Commission for their decision included:

• The absence of any rate increase requests from industry between the years of 1992 and

1996 was an indicator that the industry received adequate compensation for services

rendered notwithstanding the issue of GST put forward by the industry as a major

reason for no rate increases.

• The supply of taxis has remained, for the most part, constant since 1991 and the

ridership availability has increased substantially since that time. As a result, the taxi

industry in the Greater Vancouver region has enjoyed positive conditions for sustained

profitability.

The Commission stated that it is prepared to review rates again in 1999, but only if and

when the industry is prepared to be financially accountable and present appropriate

financial data at the time of application.

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