Sydney Taxi Industry and Uber

Cabcharge wants cap on new taxi licences scrapped so industry can take on Uber

Matt O’Sullivan
Published: April 28, 2016 – 4:25PM

Taxis would become more commonplace on Sydney’s streets to ensure passengers who book cabs are picked up more quickly, under a controversial proposal by Cabcharge to scrap the cap on plates.

In a call that puts it at odds with the NSW Taxi Council, Cabcharge chief executive Andrew Skelton said the cap on the number of plates meant a “capacity constraint” had been placed on a part of the market to protect licence-plate holders.

“To arbitrarily go, ‘right, no more licences for four more years, you can’t grow’ – I think that’s nuts,” he told Fairfax Media.

“Taxis have to be able to evolve and grow into this massive transport opportunity … not at some contrived pace to protect some licence holders. The taxi industry is not licence holders.”

As part of the legalisation of ride-sharing services such as UberX in December, the Baird government placed a four-year freeze on the release of taxi licences in Sydney to “help the industry adjust”.

Taxi licence holders have watched the value of their investments in plates plunge since reaching a high of about $430,000 in 2012.

The average transfer value of a taxi licence in Sydney has slumped by 41 per cent to $210,000 over the past year, the latest government figures show.

The state has almost 7300 taxi licence plates, about 5700 of which are in Sydney.

NSW Taxi Council chief executive Roy Wakelin-King said the priority should be to let the market settle before the government considered releasing more taxi licences.

“We are all looking for a strong and viable industry … but we just have to make sure we chart a very careful pathway,” he said.

Mr Wakelin-King said the government’s recent decision to put a freeze on taxi licences was sensible because a large number had been released in recent years, resulting in an oversupply of cabs.

However, he said the council was open to changes to the number of taxi licences at some point in the future to ensure the industry did not put itself at a disadvantage to competitors.

In December, the government announced payments of $20,000 to owners of taxi licence plates in perpetuity. The one-off payment has been capped at $40,000 for owners of multiple plates.

The compensation package includes a fund of up to $142 million for taxi licensees who face hardship as a result of the changes, and a buyback scheme for perpetual hire-car licences. It is to be funded by a $1 levy on taxi and ride-sharing operators for five years.

A spokesman for Transport Minister Andrew Constance said there was no evidence that the decision to put a stop to new taxi licences for four years was holding back the industry from reform.

“[It] will help stabilise the market for taxi licences, particularly for mum and dad investors,” he said.

Facing intense competition from ride-sharing operators and a cut to revenue from fees on card payments for taxis, Cabcharge is eager to highlight its focus on customers and the need for more taxis to ensure passengers are picked up promptly once they book cabs.

It is a similar strategy to ride-sharing companies such as Uber and GoCar, which aim for a critical mass of vehicles at any one time.

Mr Skelton said he wanted the removal of the “artificial limit on the taxi industry’s ability to service customers” because it risked losing customers if it did not adapt.

“The less relevant you make taxis, the less value there is in a licence,” he said.

Cabcharge, one of the Taxi Council’s most influential members, still makes the lion’s share of its revenue from the service fees on passengers who pay for taxis with credit or debit cards.

However, the sharemarket-listed company has been hit over the past 18 months by state governments, including NSW, halving the fee it can charge for processing taxi payments to 5 per cent.

The freeze on plates in NSW does not apply to wheelchair-accessible taxi licences.

This story was found at: http://www.smh.com.au/nsw/cabcharge-wants-cap-on-new-taxi-licences-scrapped-so-industry-can-take-on-uber-20160428-gogvaf.html

Also see: http://www.smh.com.au/video/video-news/video-national-news/the-workings-of-uberx-20160201-49u69.html

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