Assessment of the taxi sector efficiency and profitability based on continuous monitoring and methodology to review fares

25 The taxi sector presents many challenges to adequately serve the demand while maximising 26 efficiency and profitability and minimising externalities. Many authors have dealt with the 27 ‘taxi industry’ by modelling and forecasting its activity, usually using limited, incomplete or 28 no trustable data to validate their model. The present paper tackles a different point of view. 29 The applied methodology is based in the continuous monitoring of a sample of taxis that 30 provide information recorded by the taximeter about their real activity. Taximeter data allows 31 the definition of a wide series of representative and relevant Key Performance Indicators 32 (KPIs) with which characterize the taxi activity. This paper focuses on the analysis of 33 efficiency and profitability using KPIs. Thus, indicators firstly diagnose the system revealing 34 its (in)efficiencies and whether or not is profitable. While studying profitability, the concept 35 of the reasonable profit (RP) is presented to ensure welfare to the taxi driver. Indicators also 36 represent an assessment tool to evaluate improvement measures and they constitute a 37 powerful support for the decision making. In this sense, a methodology for the annual review 38 of fares is developed introducing the concept of the RP. KPIs are applied in Barcelona, where 39 they proof a demand-supply imbalance: since 2008 supply has increased significantly and 40 demand has diminished; consequently, productivity and profitability have decreased 41 considerably. Hence, KPIs reveal the inefficiencies of the Barcelona taxi system and 42 demonstrate that its profitability is at risk. 43 44