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The Need for Reform in Taxi Regulation

The taxi market worldwide and particularly in Germany is under pressure. New start-ups question the business model of taxis. Furthermore, in Germany the minimum wage was adopted last year and in consequence the taxi fares increased in many German cities. In the light of this development, the question arises which regulation does the taxi market need in order to be competitive.

Passenger transportation via taxi and limousine services in Germany is heavily regulated. According to German passenger transportation law, limousine services are only allowed to receive new transportation orders at their place of business and can only under minor exceptional conditions receive new orders while being on tour.

On the other hand, taxi services in Germany are governed by strict license requirements (i.e. Taxi Concession Number & Taxi Driver Transportation License). Furthermore, each local taxi district has issued fixed taxi tariffs. These strict regulations are meant to ensure high quality standards and the safety of the passenger.

One of the best-known opponents of this regulation operates different services within one app to enable their customers to order a car with a smartphone app. This includes, for example, a limousine service or a cheaper service with which customers can order a self-employed driver who uses his own private, unlicensed car.

This company encountered many legal proceedings all over the world. The most disputatious service is their cheaper ridesharing solution because it is a taxi-like service just without licensed drivers and checked cars. They are ignoring all regulations concerning the taxi market and argue that these regulations were made in a pre-internet era and thus are not reasonable anymore.

Moreover, customers these days are used to choose between a big range of services with different quality and prices. In contrast, the taxi market with fixed tariffs and a huge opacity in quality seems to be very old-fashioned. If we would ask customers to design a mobility service based on individual driven cars, it is most probable that they would not design the taxi market, as we know it today.

However, it is likely that the customers would put emphasis on safety. Hence, regulation is needed. It is not sufficient to deregulate the taxi market and to leave the responsibility of safety to the mobility providers. It is necessary to open the taxi market towards more customer-oriented competition, but at the same time maintain the current level of safety.

The taxi regulation could be questioned. There are some rules, which are out-of-date and need a reform. Accordingly, this has already been recommended by the Monopolies Commission in their Biennial Report (XX 2012/2013) “Competition Deficits in the Taxi Market”.

Ignoring these regulations, however, is not an appropriate way to stimulate a debate for amendments in public law in a democratic environment. In this respect, the above mentioned company faced a further setback recently by the District Court Frankfurt am Main.

Thus, we need a serious discussion about which regulation is necessary in a digital world in order to transport passengers in a convenient and safe way.

Have you faced any difficulties with ridesharing services? If so, share you experience in our comment section


Please note that this article expresses the opinions of the author and does not reflect the views of Move Forward.

3 thoughts on “The Need for Reform in Taxi Regulation”

  1. Balancing safety, the economic stability and viability of the ‘taxi/rideshare’ market, and the increasing demand for technology driven solutions to transportation needs has been a huge conversation in the United States. Some jurisdictions are of the mindset that companies that sponsor app-based pickup services are analogous to taxis and are therefore treating them much like they treat taxi operators. Other jurisdictions are very liberal and are allowing the app-based services to operate freely. The biggest opponents have been the taxi drivers who are not able to take advantage of the app-based service and feel that the services are encroaching on an otherwise saturated market. In addition to app-based ride services, car-sharing is a growing market in the United States that the law has not gotten a grasp of yet. Allowing the services to operate freely has stimulated the economy, but safety issues are looming.

  2. @mrwilson90: I totally agree. The recent court orders and authority measures in Germany for instance additionally show a certain degree of uncertainty amongst the authorities how to categories these innovative app-based technologies being (just) intermediaries between the customers and the actual transportation service. Are these intermediaries & app-based dispatch solutions to be placed in the measurable scope of present transportation law, if this law clearly only addresses the transportation providers or do we actually need an amendment of the present law to integrate these new services as well.

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