Seoul taxis suffer bumpy ride after drop in drivers, passengers

Industry

Published: 13 Sep. 2023, 17:45 Updated: 13 Sep. 2023, 18:32

Seoul taxis suffer bumpy ride after drop in drivers, passengers

Passengers wait in line to grab a taxi in front of Seoul Station in central Seoul on Sep. 6. People took 156 million taxi rides in Seoul between January and July this year, down 6 percent on year and down 29 percent from 2019, according to the Seoul city government. [NEWS1]

The number of taxi rides shrank this year in Seoul apparently dampened by taxi fare hikes, recent data analysis showed.

There were 156 million trips made by taxis in Seoul between January and July, down 6 percent on year and 29 percent from 2019, according to data submitted to Rep. Choi In-ho by the city government of Seoul on Tuesday.

With the exception of February, all months between the cited period logged an on-year drop.

Taxi usage in the January-July period this year was the second lowest in the last five years, just above 2021 when the Covid-19 restriction measures peaked.

The government and the city of Seoul in December began charging passengers extra night fares from 10 p.m., two hours earlier than the previous midnight threshold, and doubled the surcharge rate to 40 percent from 20 percent.

Three months later, basic taxi fares rose by 1,000 won ($0.75) and the distance covered by basic fares was shortened to 1.6 kilometers (1 mile) from 2 kilometers.

These changes were implemented to alleviate the taxi demand that spiked last year in the wake of eased Covid-19 restrictions and fewer taxi supplies. The number of taxi drivers decreased by 13.1 percent between December 2019 and July 2023.

But efforts to slash the late-night taxi-hailing race seem to have worked far better than anticipated, steering passengers away to take buses and subways instead.

“Taxi fares needed a gradual rise, but a near-double hike for late hours of the day prompted people to cross taxis off from their ride options in the first place,” said a spokesperson for a local mobility startup.

There were 1.53 billion subway passengers in Seoul during the first seven months of this year, up 14 percent on year, and 765 million bus passengers, up 8 percent on year.

The industry as a whole faces a challenge because the fare hike failed to muster the anticipated results, the source added.

Number of taxi rides in Seoul in the last five years [OFFICE OF REP. CHOI IN-HO, SEOUL METROPOLITAN GOVERNMENT]

The operation rate of corporate taxis in Seoul stood at 33.7 percent between February and June, up 1 percentage point from the previous five-month period, according to the Seoul Taxi Association.

“There is not a single winner from the taxi fare hike,” Rep. Choi In-ho said, urging the government to “devise a macroscopic blueprint to stabilize the taxi industry and boost the people’s convenience.”

The shortage of drivers and passengers took a heavy toll on the taxi platform companies.

Kakao Mobility, a subsidiary of Kakao and operator of the ride-hailing service Kakao Taxi, in April decided to temporarily shut down Jinhwa Taxi and KM2, cab subsidiaries of TJ Partners, which Kakao Mobility owns 100 percent of its shares.

“The decline in taxi usage due to a frozen driver market and weak ride demand led to extreme business conditions,” said a Kakao Mobility spokesperson.

“Difficulty in acquiring fixed costs had the two companies that suffered relatively higher losses close down temporarily.”

Macaron Taxi, which was the second-largest taxi service operator in 2020 with 12,000 contracted drivers, tumbled during the pandemic and saw its subsidiaries Macaron T1 and T2 go bankrupt in July and April this year, respectively.

On the other hand, Tada, a van-hailing service operated by VCNC, logged a 12 percent increase in sales after it cut down fares by as much as 5,000 won by implementing flexible surcharge rates.

The number of Tada users per week grew by 13 percent and the revisit rate by 17 percent.

“The government hiked taxi fares beyond the psychological threshold of the consumers,” said Jeong Ji-yeon, the secretary general of the Consumers Union of Korea.

Grabbing taxis seems easier now, but the fare hike dampened public convenience, consumer sentiment and the taxi economy, according to Jeong.

BY PARK MIN-JE, SOHN DONG-JOO [sohn.dongjoo@joongang.co.kr]