Page last updated at 23:12 GMT, Wednesday, 16 July 2008 00:12 UK

London cabbies seek fare deal on fuel

By Gavin Stamp
Business reporter, BBC News

London cab driver Steve McNamara
London drivers say a fuel surcharge will help to protect their livelihood

Steve McNamara, a cab driver for more than 20 years, winces each time he visits the pumps.

"Every day, virtually, fuel costs go up," he says.

"If you think it is affecting the average family who fill up their car once a week. I fill up that cab every two days. It is making an enormous dent into my running costs."

As one of London's 24,000 licensed black cab drivers, fuel is the essence of his livelihood.

Being self-employed, he has no means of shelter from soaring diesel costs, which he says have risen 30% this year alone.

Tank troubles

At current prices, his "cost of tank" - the amount spent on fuel - is likely to amount to a painful 2,500 this year.

"Our costs are very high anyway," he adds. "The vehicles are very expensive and the maintenance colossal and we are now facing sky-high fuel prices.

"It will come a point when the straw will break the camel's back."

Things have not reached crisis point yet, he stresses, although he is "fearful" about the future should prices continue to climb.

During a typical rush hour in London it would be hard to sense any such looming nightmare for the capital's famous old "hackney carriages".

The public understand there has been a vast increase in the cost of fuel and someone has to pay for it
Richard Massett, Licensed Taxi Drivers Association

Cabs seem as ubiquitous as ever, treasured - by their various users - as a combination of congestion-buster, human satellite navigation device and, if need be, a shelter from the elements.

But as sole traders in a highly regulated industry, drivers are more vulnerable in the worsening economic climate than many other workers.

"Nobody has gone bankrupt as yet but it is having a big impact on drivers' earnings," Richard Massett, from the Licensed Taxi Driver Association (LTDA), says of the rising fuel burden.

Drivers are in the unenviable position of seeing their costs escalate without being able to adjust their prices in response.

Unlike the capital's 44,000 private hire taxi drivers, who can charge what they want, fare rises for metered cabs are capped by Transport for London.

Drivers argue that April's annual 2.7% rise - which bumped the average cab fare up to 10.85 - was insufficient to cover earlier fuel increases let alone the further sharp rise since then.

Transport for London, which calculates fare rises on the basis of changes to average national earnings and drivers' costs, says it needs to strike a balance between protecting drivers' income while also giving passengers value for money.

But with fuel costs far outstripping the headline rate of inflation, drivers argue they need more support if they are to maintain current levels of service and choice.

"You just can't go on with costs increasing the way they are," says Richard Massett. "If it continues to increase, people won't be able to afford to go to work."

Trying to economise

Short of working fewer hours, there are few opportunities to economise, Steve McNamara says.

More drivers are going part time, he notes, or switching from night to day shifts to make journeys more cost-effective.

"People are always telling you you need more cabs in the evening but this is beginning to have the reverse effect," he argues, explaining the financial risk of making the return leg of a long night time journey without a passenger.

London cabs waiting at rank
Weekdays: 6am-8pm: 9.82
Weekdays: 8pm-10pm: 11.39
Weekends: 6am-10pm 11.39
Overnight/holidays: 13.37
Source: Public Carriage Office

"If I take a job 18 miles out of the centre, it is going to cost 6 [in fuel] to come back," he says. "It starts to lose its attraction."

Many passengers will be sympathetic to the situation drivers find themselves in but the industry's preferred solution to its financial challenges may be less palatable.

It is lobbying for an airline-style fuel surcharge to be added to all cab fares in London, irrespective of their length or cost.

"That is not something we have been able to do and that is what we want to do," says the LTDA's Richard Massett.

"I think it has to happen."

As Steve McNamara explains, a flat-rate charge of 50 pence per journey would enable drivers - on the basis they do an average of 20 journeys a day - to take home an extra 10 a day.

"It wouldn't cover the increase in running costs but it certainly would go some way towards it."

Confronted with such an increase, he accepts that some customers may take umbrage and choose other forms of transport but he hopes the impact will be limited.

"The public understand there has been a vast increase in the cost of fuel and someone has to pay for it," Richard Massett adds. "It can't continue to be the drivers."

Policy options

For its part, Transport for London (TfL) - under the leadership of new London Mayor Boris Johnson - says it is looking at options for helping drivers, while stressing it has no firm plans in mind.

Sign showing fuel prices in UK
Being self-employed, fuel costs have a direct impact on drivers income

"Drivers associations have expressed concerns about rising costs of fuel," a TfL spokesman acknowledges.

"We are considering what action could be taken to support drivers if prices continue to rise."

Passenger groups, not unsurprisingly, are rather ambivalent about such a prospect.

For many people, the idea of fuel surcharges has been discredited by the seemingly "only way is up" trend for airline charges as well as the high-profile price-fixing allegations in that industry.

"I think we would be wary of a changing the pricing mechanism," a spokeswoman for London Travel Watch, which supports the current annual review of fares, says rather diplomatically.

In reality, it is worried about constant fare changes as prices fluctuate and whether charges will then be removed if the outlook improves.

Comparing eras

Worries about the poisonous cocktail of rising prices and falling consumer confidence - hitting the number of people using cabs - are unlikely to abate for some time.

With the spectre of the 1990s recession hanging over the current slowdown, cab drivers are as well placed as anyone to gauge how fragile the economic mood in London really is.

"It is probably not as bad as 1991, which was the worst period in living memory," Richard Massett believes.

A small consolation for the time being, but the question is how long it will last and how much more cabbies will end up having to pay?

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