CEO ARTICLE

Apr 01 2016

 

I am confident that a decision from Government on the future of commercial passenger vehicle (CPV) regulation is not far off. It remains my firm view that while a decision is needed as soon as possible, it is important that it is not just a quick decision but the right decision.  The last thing any of us need is to be having these discussions again in twelve months’ time. 

Much of the current debate about how to regulate ride hail services comes back to a central question – does ride hail provide a genuinely new service, unlike taxis or hire cars, thereby creating a new market, or are they simply providing the same service to an existing market?  In other words, are ride hail and taxis servicing the same or different markets? It is vital these issues are resolved prior to the Government making a decision about the future because they will fundamentally underpin whether or not whatever is developed will be sustainable.

Uber and others like to argue there are two separate markets evidenced by the much cited fact that 70% of the work taxis do is ‘rank and hail’ work to which they do not have access. They conveniently define what they do as ‘booked work’. As the VTA have made clear, we are of the resolute view that there are not two markets at play.  Ride hail is not a booking as such because it is only possible to make ‘ready to ride’ requests for transport – effectively the same as traditional street hail and rank work.

When the 70% rank hail versus 30% booked assessment of taxi work was made by the Taxi industry Inquiry (in 2011) the only vehicles capable of doing rank and hail were taxis, and so this 70% represented 100% of the total market.  With the advent of new, legal or otherwise, service providers 70% of taxi work may still be rank and hail, but importantly they no longer have exclusive access to it. New providers are now able to access the work, be it through a different means - it is the same 'market' they are serving. For this reason taxis no longer hold the exclusivity they once did and this is why we see the NSW approach to this issue as inherently problematic in the medium and longer term.

From a policy perspective, the motivation to bundle ‘rank’ and ‘hail’ services was to identify separately the section of the market seeking immediate transport in order to guard against the potential for market failures. It has become clear that these previously sensible distinctions no longer hold weight.  Ride hail providers only accept requests for immediate ‘ready-to-ride’ transport, something which seems to us to exist between a traditional pre-booking and a hail - an eHail if you will. It’s not exactly a hail as it is not occurring anonymously on the street, but it’s also not a pre-booking as it does not represent an arrangement for future travel.  Given app-based ride hail bookings can only be for immediate transport, the customer displays similar need and lack of opportunity to research options as in a traditional hail scenario.  

The idea that ride hail is not encroaching or will not encroach on the exclusive rank/hail domain of taxis is undermined by the establishment and operation of dedicated pick up and drop off zones for ride hail providers at various events in late 2015 and at the 2016 Grand Prix.  A dedicated area for the dwelling of commercial passenger vehicles can be defined in no other way as a rank.

Finally, just one other quick point on the 'two markets' notion that Uber and others claim. They point to new customers as evidence of the development of a new market. This is another flawed argument probably designed to generate regulatory advantages for their own business model. If the car and trip numbers they quote publicly are accurate, which is debatable, it could be just as easily argued that their ability to attract new customers to use CPV services results from the fact they offer a cheaper service because they don’t incur the cost of regulation.

We are of the view that we have a very convincing argument and it is crucial that changes reflect what is genuinely occurring in the market.  We will continue to argue this very strongly as we approach this very important juncture for our industry.

David Samuel
Chief Executive Officer

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