Cutting number of Seoul taxis may draw ire

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Cutting number of Seoul taxis may draw ire

The Seoul Metropolitan Government announced Thursday as many as 11,831 taxis are to be removed by 2019, bringing the number of cabs from 72,171 down to 60,340.

This is the first time the Seoul government has officially limited the number of cabs in the city. Although it has conducted surveys on the number of cabs every five years since 2004, it has never called for an official reduction in their number for fear of a backlash from taxi businesses.

The government has also ordered a halt on the issuance of all new taxi licenses until the excess number of cabs are put out of service. Among the 11,831 cabs to be removed, 3,735 are cabs operating in taxi businesses and 8,096 are privately-owned.

The city government hopes that a reduction in the excess number of cabs in the city help improve the competitiveness of the business.

Seoul announced in 2013 there are 6.77 cabs for every 1,000 people in the city, twice as much as in other cities worldwide with a similar population density. London, for instance, had 3.31 cabs, New York had 1.58 cabs and Paris had 1.26 cabs, each per 1,000 people.

The Taxi Industry Development Act stipulates once a cap on the number of taxis is officially announced in a city, the city government needs to submit to the Ministry of Land, Infrastructure and Transport, within 30 days of the announcement, an agenda detailing how the reduction will be achieved.

The Seoul government plans to hold a taxi-reduction committee meeting in the near future and confirm a reduction plan around April 10.

“In principle, reduction can be made in stages over 20 years, but if the process drags on it will have no effect on the economy,” said a Seoul government official. “If possible, we hope to reduce the number of cabs by 2019.”

The Seoul Metropolitan Government’s estimate of the appropriate number of cabs for the city has reduced by over 9,000 from five years ago, when it said that about 70,000 cabs are adequate.

“As we opened Subway Line 9, and more bus routes, there is less demand for cabs in the city,” said Choi Jae-wook, head of the taxi license department at the Seoul government.

Heavy backlash from taxi companies is expected. When cab drivers’ licenses are revoked, the drivers are expected to be paid about 50 million won ($43,826) if they are incorporated cab drivers, and 80 to 85 million won if they are drivers of privately-owned cabs. The amount is calculated in line with the transaction price of the cabs.

But the compensation fee set by the Transportation Ministry and Seoul government is 13 million won per cab driver with the rest to be covered by taxi cooperatives and companies.

“The calls for a raise in compensation will only get louder once taxi licenses are no longer issued,” said a stakeholder of a taxi company. “They may need to pay as much as 100 million won to drivers of privately-owned cabs.”

Seoul government last year tried and failed twice to agree on the compensation fee in its taxi-reduction committee.

“The government is considering many possible policies, including lending loans to taxi companies at low interest rates to help them compensate the drivers who are let go,” said a Seoul government official.

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