E-hailing taxis give metered taxis short end of stick Competition Commission finds
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Cape Town - METERED taxis operators have been getting the short end of the stick as the entry of e-hailing services disrupted their business model, leaving them struggling to keep up, so found the Competition Commission in its final report on the public transport market.
Commissioner Tembinkosi Bonakele yesterday said the regulatory framework for e-hailing and metered taxis should be uniform to create a competitive environment.
“At an operational level, metered taxis comply with the legislative restrictions imposed on their licences and operate within the defined radius. In the case of e-hailing services, the radius is not adhered to, because the app used by e-hailing operators allows operators to connect to the nearest passenger outside their municipal boundaries, in violation of the licence conditions,” he said.
The growing popularity of e-hailing services caught regulatory authorities off guard, as e-hailing services did not fall under the conventional regulatory framework, the commission found.
“Despite the entry of e-hailing services, metered taxis were slow to respond and found it difficult to create their own digital platforms. Strong network effects increase barriers to entry into platform markets, because of the ’winner takes all’ or ’winner takes most’ phenomenon.
“The brand loyalty and first-mover advantages enjoyed by pioneers of e-hailing services make it difficult for metered taxi companies – or operators – to launch apps that can successfully compete with established brands,” said Bonakele.
The commission recommended that the regulatory dispensation in the Amendment Bill for e-hailing services be extended to metered taxis.
“The commission recommends that the legislature delete Section 66(3) of the National Land Transport Act (NLTA) which allows MEC or Minister, together with the planning authority, to determine a fare structure for metered taxi services.
“No price regulation for metered taxis is recommended as the Amendment Bill does not regulate e-hailing fares. This is essential to create an even competitive landscape.”
In terms of empowerment, the commission also recommended that the Department of Transport should assist the industry to establish a national association of metered taxis and e-hailing operators.
This along with further assisting metered taxis in conducting market research studies, business development, innovation which includes the development and deployment of technology to modernise the metered taxi industry.
Despite the minibus taxi industry accounting for approximately 66.5% of commuters, the commission found that they only received 1% of the total subsidy funding, in the form of capital subsidy (taxi recapitalisation).
“Address fragmented subsidies in the public transport sector to improve coordination and correct the skewed distribution of subsidies between urban and rural areas. Equitable allocation of subsidies to the taxi industry and rural bus operators.”
The Department of Transport did not respond to requests for comment by deadline.