With the rising cost of fuel, you can well imagine that the prices of transportation here in the Philippines have gone up. Whether it be taxis, jeepneys, buses, whatever the mode of transportation, the fares are increasing. These fare increases, though, have made me a little curious. Every time that a jeepney operator wants to raise his fare by half a peso, he must seek approval from the government first. The LTO has control over this, that’s the land transportation office. Any time that any of these transportation operators wants to increase their price, they must file a request to the LTO. If the fare increase is approved, it applies to all vehicles of that class. So, for example, if jeepney operators think that they should increase the price, the petition is generally filed by their jeepney drivers Association, and if approved, every jeepney driver in the country can raise his rates then.
I feel this whole system is very cumbersome, filled with red tape, and controlled by the bureaucracy. I’m a free-market guy, I always have been. I feel it’s always better for the free market to determine the price than the government. If the current jeepney fare is eight pesos, what if José wants to make his jeepney nicer than all the others and charge 10 pesos? Well, under the current system he can’t legally do that. For me, that means that all jeepney operators have really no incentive to improve their vehicles, make them nicer, more comfortable or what ever. The price is the price, no matter what. What if Carlos wants to make his jeepney have air conditioning? Why couldn’t he do that and charge, the price that the customers would be willing to pay? I mean, the free market sets the price. If customers feel that a jeepney with air con is worth 20 pesos per ride, they’ll pay it. If somebody sets up a nice jeepney like this and they get no customers, well, they’ll have to adjust the price until somebody starts riding.
In today’s world, with gas prices increasing almost daily, having to go to the government and get permission for a price increase is kind of crazy. The approvals on these requests can take months to get done, and by then the requested rate increase is too small anyway, because the price of gas has gone way up. So, the way it is now, when a fare increase is approved, they immediately apply for another fare increase. Personally, I feel this is kind of unfair to the drivers. Frankly, I don’t see how a jeepney or taxi driver can make any money these days. The price increases in fares have simply not kept pace with the increase in fuel prices. I hear that a lot of such drivers are now seeking other forms of employment, because they simply aren’t making any money.
To me, the solution to this is simple. The free market. It’s a good thing!