Guam’s Taxi Industry

Guam Taxi Industry Story
FOR: Marianas Business Journal
23 Feb 2012
BY: Stephanie Lundberg

CHARGES	OFFICAL FARE RATES
	1984	2003	2005 (Current)
Flag Rate	$1.50	$1.80	$2.40
1st Mile	$2.10	$3.00	$4.00
Every 1/4th Mile Thereafter	$0.40	$0.60	$0.80
Waiting Time (Every 2 Minutes)	$0.40	$0.60	$0.80
Large Luggage	$1.00	$1.00	$1.00

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U.S. FARE RATES BY LOCALE
	Flag Rate	Rate Per Mile	Waiting Fee (Per Hour)
Guam	$2.40	$3.20	$24.00
Honolulu, HI*	$2.80	$3.20	$30.00
Puerto Rico*	$1.00	$0.30	$20.00

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Guam’s taxi industry has undergone considerable changes in recent years. Typhoons in the Philippines, the 2011 Tohoku earthquake and tsunami in Japan, and the global economic downturn have all strained a trade already adapting to a tourism industry trending away from taxis and toward tour buses and vacation packages.

The industry itself has experienced relatively little growth. According to the Department of Revenue and Taxation’s Weights and Measures Branch, 209 taxis and their meters were tested and certified for use in fiscal year 2011, down from 227 in 2010. Of those 209 drivers, who are required to renew their licenses yearly, only 23 were new registrations.

The comparative shallowness of Guam’s taxi business is reflected in some other numbers as well: 124 of the 209 registered taxis work for one taxi company on Guam: Miki Taxi, as reported by its president Hong Soon Im. The remaining drivers work independently, through dispatch services, or through other smaller concessionaires.

A depressed economy, as well as the rising popularity of discount tour buses among visitors, finds independent operators and small taxi services competing for a shrinking number of fares at hotels and malls, which often already have exclusive taxi concessionaire contracts in place. 

Even Miki Taxi, which has contracts – some exclusive – with 11 hotels and two shopping centers, has felt the effect of tourist business migrating to touring companies. “For Guam, generally, we need a touring bus. And touring buses [are] really operated well by Lam Lam Tours and HIS Tours. They’re the ones killing our business a lot,” said Im. “I don’t complain about the bus, because the bus is their own business. Taxi is my own business. I have to find out what I can do with taxi, not for the bus, right? The bus company, they do what they have to do. On my side, there’s a different way. But they are competition.”

A portion of the impact on the industry can be measured in taxi drivers’ salaries. A 2010 U.S. Bureau of Labor Statistics report estimated that Guam drivers make an average salary of $17,420 dollars a year, well below the national average of $24,580. This income must cover not only a driver’s living expenses but also rising business costs such as taxes, licensing fees, gas, cab maintenance and repair.

“When the bill goes up – they have to use their meter, and when the fuel goes up, the meter [doesn’t] go up,” says Julita S. Walin of her taxi drivers. Walin owns and operates the Hafa Adai Taxi dispatching service. “Some people don’t realize that these taxi drivers, that’s their means of living. They have to make a little money for their gas, and then they have to make – if they’re paying [for their] car, then they have to make money [to pay the bill]…They have to make money to support their family. This is their livelihood.”

“The [metered] rates are standard, but the problem [is that] the prices, like gasoline, continues increasing,” said Moises B. Gomez of the All Reliable Taxi dispatching service. “Parts, labor [on] the cars, everything is increasing. This is our only source of income, we don’t have a paycheck. Just like survival, [because] whatever income we earn just pays our bills, and everything is increasing, like government fees, the hour pool, you know everything. Our business, our livelihood, is just survival.”

One way the industry appears to be adjusting to the challenges of tour buses and the economy is with the introduction of flat rate fares. Flat rate fares are generally meant to entice more customers to use taxis by offering a reduced, single fee for travel around the island. 

“Yes, yes, we offer flat rates,” said Gomez. “We explain to [the customer], even if we offer a flat rate, we’re supposed to operate the meter to show to them it’s a low [cost] transportation service on Guam. But whatever is on the meter, we will go by the contract or agreement [for the] flat rate.”

“Well, it depends on the driver. If they want to accept [it], sometimes they do that, they negotiate. Because I cannot tell the driver, ‘this customer only has this [much].’ I always explain to the customer, ‘you talk to the driver, if the driver is willing to give you [a flat rate].’ But actually, that’s against the law, because you have to turn on your meter,” said Walin.

Im also acknowledges that Miki Taxi offers flat rates, although the service does not deal directly with customers. “[We do] not negotiate – we have a flat rate for the hotel, [the hotel] has a taxi podium. We joined the flat rate to the customer – the customer knows already, people [before] they ride, they know already the price. If they’re satisfied with the price, they call [the] taxi. We don’t deal [on] the rate with the customer,” Im said.

According to Raymond A. Leon Guerrero, who has been the Weights and Measures branch supervisor since 1984, the Weights and Measures branch is aware of the practice, although it is not strictly allowed by taxicab rules and regulations. 

Chapter nine of the Guam Administrative Rules and Regulations of 2004 established by DRT says, “No driver, owner or taxicab company shall permit or engage in transportation for hire with a flat fare agreement as a means of compensation. No driver, owner or taxicab company shall agree, negotiate or contract its services for hire to any person without using or intending to use a taximeter that has been inspected and that which reflects the current rates of fare.”

Despite its presence in the G.A.R.R., the regulation is not currently being actively enforced by Weights and Measures. “Yeah, they do it. They practice that,” says Leon Guerrero. “Well, it’s an understanding that they have…We just tell them to use their meters.”

Leon Guerrero said that Weight and Measures has developed a good relationship with the taxi industry over the years, which has allowed the department to give taxi operators a measure of trust in their dealings with flat rates. “Knowing that it’s less of a charge, it’s authorized I guess. And that’s why it’s in place, because I know that, and they’re not ripping people off.”

Leon Guerrero also notes that establishments like hotels and malls respond to guest complaints about overcharging with flat rates and other taxi practices by reviewing and enforcing concessionaire contracts. 

“When complaints come in, it’s [to the] tops of the hotel. What it is, they’ll complain to the front desk and their management will get that to the owners. And you see, that’s why they’re real strict with this, with overcharging. Because then, if you work for me, and I have a complaint and I give you a warning, the next one, you’re out. And then wherever you go it’s going to be hard for you to become a taxi driver with other companies because of your reputation of overcharging. So they’re pretty much on top of things,” said Leon Guerrero.

Several companies invested in the tourism business have tried to affect other changes within the industry realm, outside of flat rates. The Guam Visitor’s Bureau, Im of Miki Taxi, and Gomez of All Reliable Taxi have all attempted to form a taxi association or union to ensure uniformity, honesty, and driver support across taxi services. To date, their attempts have not been fruitful. 

“It was over 20 years ago when GVB served as a mediator in its attempt to establish a taxi association, however, it never materialized because of the difficulty in getting the independent taxi drivers and taxi companies to agree to certain conditions that would benefit the entire taxi industry,” said Bruce Kloppenburg, member of GVB’s board of directors.

Gomez agrees with Kloppenburg’s assessment, although he is still hopeful that an association can be formed. “If you have an union or an association, you have benefits. If you are…under a concessionaire, and if you or your taxi has a problem, the concessionaire will not help you. But if you have an association, of course you have a membership fee, then you have enough funds [that] if anyone has problems, they will help you. Like dental, like medical, legal protection privileges. As a private individual, I hope that government officials or senators will help the taxi drivers [form an association],” said Gomez.

There is room for improvement elsewhere as well, particularly in the area of independent drivers serving the airport, who have repeatedly been cited by industry experts as being the last section of the business violating established standards for taxi fares, cab maintenance, and customer service. 

There is also some concern among some that staffing and funding shortages at DRT’s Weights and Measures limits their ability to administer taxi rules and regulations.

“Enforcement is a key issue and [the Department of Revenure & Taxation] did make an effort to enforce the taxicab regulations. However, enforcement is not as aggressive today due to the manpower limitations of [DRT},” said Kloppenburg.

Leon Guerrero said that he and his team conduct random taxi inspections up to three times a week, although he says they find few violations that rarely result in significant penalties. 

However, he does seem to recognize concerns about staffing being stretched thin in his branch. “Yeah, there [are] only two of us. And we take care of the taxi industry out here, inspections; we do all of the scales, your mom-and-pops, from your Continental to your fish down at the port. We take care of about 491 scales that we did last year. And then of course, the gas pump meters – there’s 1,058 meters, we do all the gas stations…Basically, there’s three of us but one of my guys is deployed. He’ll be back in October…We’re doing okay, okay with what I have,” he said.

Until that time, industry experts are adamant that some development efforts have been successful. Kloppenburg noted Guam International Airport Authority’s campaign to improve taxi service there, something that GIAA confirms. “In the past, GIAA had experienced overcharging of taxi services, aging vehicles and general taxi operator appearance.  We’ve met with taxi operators to address these issues regularly. We have since seen a decline in customer complaints,” said Airport Services Manager Jean Arriola.

Both Gomez and Im point to improvements in customer service, taxi maintenance, and honesty as factors that make the future of Guam’s taxi industry an encouraging one. “The customer, he will compare [the taxi] to other taxis, your service, you’re courteous, you’re on time, your car is clean. If you’re car is clean, you’re on time, and you’re friendly, of course the customer will call you every time. Our business is customer service, transportation, and communication.”

“Taxi is door service, and [kindness], and smiling, and good language service, and honest taxi fare, and clean, anytime on-call, all day. So we bring up the strong points to the customer. So I’m not complaining about my business, no matter [what is] coming,” said Im.