A Taxi ride to the office or home will cost more starting Thursday as Shanghai city has approved its first fare increase since 1998.

The base fee, which covers the first three kilometers of a trip, will increase to 11 yuan (US$1.36) from 10 yuan during the day, while the price after 11 PM will jump to 14 yuan from the current 13 yuan.

The price of each additional kilometer will also rise slightly from 2 yuan to 2.1 yuan, with the final fare rounded up or down, the Shanghai Price Bureau announced Wednesday.

In the city's suburbs, the first three kilometers will cost 9 yuan, up from the previous 8 yuan, and each additional kilometer will cost an additional 0.1 yuan.

According to the bureau's calculations, the overall price hike is 6.7 percent, and passengers will have to pay 1.4 yuan more for each trip on average.

The city will begin adjusting the meters on the 45,000 taxis in Shanghai today, but that work won't be complete until the end of the month.

The increase is the direct result of a newly enforced mechanism that allows taxi fares to float with fuel prices to counter the influence of rising gas prices on the taxi industry and drivers.

In March, the price of gasoline and diesel fuel rose more than 5 percent on the back of major increases in the cost of international crude oil.

The city held a public hearing in the middle of last month to summon opinions from taxi drivers, taxi company officials, and riders for the mechanism, which they believe will help deal with any future fluctuation in fuel prices.

"The increase will ensure taxi drivers' incomes are not affected, but will not raise the taxi companies' profits," said bureau director Wu Zhenguo, stressing fares could also drop if oil prices recede.

Next month, the government and taxi companies will stop paying subsidies to drivers. Currently they pay more than 800 yuan a month for each car, which are normally shared by two drivers.

Taxi companies will also lower the rental price they charge drivers for their cars. Currently the fee is 9,800 yuan or even higher a month for one car. The bureau set a future ceiling price of 9,500 yuan a month.

The new fare mechanism means no public hearing will be needed for future price changes, but fare won't change more than once a year unless gas prices fluctuate wildly.

While taxi drivers seem pleased with the fare increase, some working in the suburbs are worried they will have a tougher time competing with unlicensed cabs, which already charge lower fares.

Bureau officials say they will step up their efforts in helping legal cab companies in the suburbs, where "black cabs" are prominent.

(Shanghai Daily May 11, 2006)