Taxi companies claim there are too many cabs

A major problem for the taxi industry is oversupply, and not of customers.

According to the Ministry of Land, Transport and Maritime Affairs, the number of passengers has decreased by 22 percent over the last 16 years, from 4.9 billion in 1995 to 3.8 billion in 2010, but the number of licensed taxis has increased by 24 percent, from 205,835 to 254,955 in the same time period.

Particularly, the number of private taxis has increased more than corporate taxis.

The Transport Ministry said the number of private taxis increased by 38 percent, from 118,463 in 1995 to 163,287 in 2010.

The number of corporate taxis has only increased by 3 percent, from 87,372 to 91,668 in the same period.

“As the local autonomy system was introduced in the mid-1990s, heads of local government offices who have the power to authorize taxi licenses indiscriminately issued them as they wanted to attract local drivers’ votes,” a spokesman for the Transport Ministry said.

“Since 2004, the government limited the total number of taxis for each region as a measure, but it didn’t work well.”

But transport experts are saying that the Transport Ministry also is responsible for the taxi oversupply.

“The government tended to blame local governments every time problems occurred in the taxi industry,” Professor Kang Seung-pil from the department of earth and environmental science at Seoul National University said. “The central government should develop a strong restructuring plan that local governments can follow.”

The policy that the government provided in 2009 was ineffective.

According to the revised Passenger Transport Service law, it prohibited a driver that possessed a taxi license from selling his or her license to another person.

But a condition, “The licenses issued before the revision aren’t subject to the revised law,” was included at the time, meaning the government lost its chance to control the number of taxis. There has been speculation that people in the taxi industry bribed legislators to include the condition in the revision.

A study conducted by the Korea Transport Institute said that of the 250,000 taxis in the country, about 50,000 exceed the demand.

It concluded that the way to solve problems for the taxi industry isn’t to designate taxis as public transportation, but to reduce the number of vehicles.

It added that it could waste billions of won of taxpayer money if it fails to reduce the number of taxis, though the new taxi law supports a high amount of government subsidies.

“The National Assembly conducted surgery without making an accurate diagnosis,” a spokesman for the Transport Ministry told the JoongAng Ilbo.

There are also opinions that passing the taxi bill is against the “green growth” policies that the government promoted with an agenda of “Low Carbon, Green Growth” since 2008.

“One taxi only transports one to three passengers at a time while buses or subways transport far more passengers, but taxis produce more greenhouse gas than buses,” Goh Seung-young, head of the Korean Society of Transportation said. “It is nonsense that a country promoting a green growth paradigm includes taxis as public transportation.”

Despite the passage of the taxi bill, the Transport Ministry is expected to battle with the taxi industry and legislators.

It recently declared that it will minimize support measures it proposed to the taxi industry before the bill was passed; paying compensation in return for reducing the number of taxis, providing garages where taxi companies keep their vehicles and diversifying types of fuel (all taxis use LPG currently).

The Transport Ministry said it will develop a master plan for restructuring the taxi industry and it will include the plan in the Passenger Transport Service law by the first half of the year at the latest.

Their first goal is to reduce the number of taxis. It added that they are considering purchasing taxis with government funds and also strengthening requirements to put tougher restrictions on selling and buying taxi licenses. It also will impose heavier penalties on drivers who refuse to take passengers and on taxi company owners who hire subcontracted drivers instead of regular workers.

Some companies provide a taxi to a subcontracted driver to save on expense for gas and maintenance that the companies are required to provide for regular drivers.

The government is currently considering paying 13 million won if taxi companies or private taxis cancel a license for one taxi.

But the taxi industry is saying this is too little because a private taxi is sold at a price between 60 million won ($56,793) to 70 million won and a corporate taxi is sold for 30 to 40 million won.

The Transport Ministry is also considering revising the fare system. Because a taxi is a high-class transportation system, it is considering increasing the basic fare and also diversifying the fare system. The basic fare for taxis in Seoul is 2,400 won.

It also is planning to develop a digital control system that can monitor taxi drivers’ personal profiles, vehicle conditions and current whereabouts and operation records in real time in the next three years with high-technology digital devices that track taxis.

The technology will force tax companies to run their business more transparently.

“About 824.7 billion won in funds are given to the taxi industry a year,” said Kim Yoo-in, director of the Taxi Industry Division at the Transport Ministry said.

“Though the taxi bill was passed in December, we do not have a plan to set an additional 1 trillion won budget for the industry.”

By Special Reporting Team [sakwon80@joongang.co.kr]