Proposed new rules to help taxis compete with Uber

The Competition Commission has recommended that various regulations in the National Land Transport Act (NLTA) be scrapped to allow for better competition in the taxi industry.

This is according to a preliminary report of the Commission’s Market Inquiry into Land Based Public Passenger Transport.

The changes are aimed at facilitating better competition between metered taxis and e-hailing services like Uber and Bolt.

The report recommends amendments to legislation with regards to area restrictions and pricing structure, as well as an overhaul of the system for issuing operating documents.

No operating licenses

A key concern indicated by the Commission was the prevalence of e-hailing drivers who provide services without the necessary operating licenses.

Part of Section 66 of the NLTA stipulates that both metered taxi operators and e-hailing services are required to apply for an area-based operating license which defines a radius within which they are allowed to operate, as well as allocated taxi ranks, terminals, pick-up, and drop-off points.

The Commission found that between 35% and 55% of Uber drivers operated without a valid operating license in major cities, while the figure rose to between 70% and 95% of Bolt operators.

One of the reasons for this is because e-hailing apps allow drivers to connect to the nearest passenger outside their municipal boundaries, which is in violation of the operating license conditions.

This is a sources of conflict between metered taxi operators and e-hailing drivers, as the former believes it establishes a regulatory environment that creates an uneven competitive field.

“At an operational level, metered taxis comply with the legislative restrictions imposed on their licences and operate within the defined radius,” the report said.

Uber’s price advantage

The Commission found that Uber enjoyed a significant price advantage over metered taxis, particularly for short trips.

“The comparison of prices between e-hailing services and metered taxis may vary from 100 to 200 per cent depending on the distance and time of travel,” the report stated.

“Irrespective of the distance, Uber prices remain significantly lower than metered taxis,” the Commission added.

It listed a few examples of price discrepancies for the same trips in the table below.

Findings

The first recommendation of the report was that the restrictions on operating licenses be scrapped.

“Area restrictions reduce competition and their rationale is incompatible with the evolving nature of digital markers and may constrain both e-hailing operators and metered taxi operators,” the Commission said.

It wants both metered taxi and e-hailing operators to be able to provide services nationally.

The Commission further recommended that no pricing regulations for metered taxis be implemented and said the price-setting mechanism which allows the MEC or Minister for Transport to determine a fare structure together with a planning authority should be removed.

Another problem identified in the report was the issue of backlogs on operating licenses.

The Commission recommended an overhaul of the issuing of these licenses and removal of quantity restrictions.

“This would mean that operators will still be required to apply for roadworthy permits, but their operating licence applications will not be denied based on supply and demand,” the report stated.

It also wants the Department of Transport (DOT) and Provincial regulatory entities (PREs) to help establish a national association of metered taxis.

“A formalised structure for metered taxis will assist with consultations with the government and advance their interests in the industry in light of the digitisation of the market.”

Now read: How Bolt will beat Uber in South Africa

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Proposed new rules to help taxis compete with Uber