A methodology for a pricing regime for three-wheeler taxi services

Abstract

The alarming growth of the informal transport sector in Sri Lanka during the past decade has given rise to the need to develop a regulatory framework to ensure the protection of both consumers' and service providers' rights, alongside those of the society at large. This study focuses on existing socio-economic features and the operational characteristics of three-wheeler taxi services, takes note of regulatory requirements, and devises a methodology for developing a fare index for three-wheeler transport services with the objective of developing a regulatory framework. At present, there are over one million three-wheelers in operation; a number which increases daily due to the attractiveness of income generated and the minimum prevalence of barriers to enter the industry. These findings are based on a survey conducted with the participation of 342 three-wheeler drivers from Colombo District. The analysis results show that fare setting, fare meters, regulation, standardization, and inspections, service time and operating hours, registration, identification, certification from relevant authorities (Provincial/Municipal council, any governing bodies), age and minimum level of experience, police recommendation, regulations for allocation vehicles to parks and related barriers are the factors relevant to the development of a regulatory framework for informal transport operations. Further, the paper also presents a price index based on cost-plus pricing method that may be used in a future regulatory mechanism.