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Business trends

Sayonara sticker shock: Japan's cabs to offer preset fares

Operators hope to encourage taxi use by displaying full prices on apps

Passengers will be able to see the route and fare for their cab rides ahead of time with the new system. (Photo by Taro Yokosawa)

TOKYO -- Major Japanese taxi companies will start offering predetermined fares as early as October, hoping to stem ridership declines by assuring customers that getting caught in heavy traffic will not lead to higher prices.

The government lifted the ban on preset fares this year in an effort to improve transparency for likely customers, such as foreigners or others who do not have driver's licenses. Such Tokyo-area operators as Nihon Kotsu, Daiwa Motor Transportation and Kokusai Motorcars, as well as peers in Osaka and Nagoya, have applied to use the framework.

Generally speaking, the prospective rider would enter a pickup location and destination into a taxi service's smartphone app. The app would then offer a route and price to accept or reject.

Once the fare is set, the passenger would not pay extra even if the cab gets stuck in traffic, for example.

Fares will depend on the distance to be traveled, as well as times and days of the week. Preset rates came within 0.6% of metered fares in a 2017 trial by the Ministry of Land, Infrastructure, Transport and Tourism.

"Customers will be happier if they know what routes they are taking and how much they will pay," Nihon Kotsu Chairman Ichiro Kawanabe said.

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