The city of Seoul’s plan to raise taxi fares from next year is sparking disputes over whether it could be a viable solution to the deepening shortage of nighttime taxis.
The Seoul Metropolitan Government recently filed a plan for the taxi fare hike to the Seoul Metropolitan Council, as a growing number of people find it extremely difficult to hail a taxi at night in crowded places like the Gangnam Station area in southern Seoul.
Under the plan, the basic fare would jump to 4,800 won ($3.50), up 26 percent from the current 3,800 won. The distance covered by the basic fare is also expected to be shortened from 2 kilometers to 1.6 km. The nighttime surcharge is also set to go up.
The controversial plan comes as the mismatch between passengers and taxi drivers is widening. Considering related factors, it seems fairly difficult to fix the problem, even with the drastic fare hike proposed by the city.
During the pandemic, people’s outdoor activities inevitably plunged. This resulted in sharply reduced income for taxi drivers. Many taxi drivers, especially those in the younger age group, quit and sought other better-paying jobs in other transportation sectors.
As young taxi drivers provided the bulk of nighttime services, the manpower drain led to a severe shortage of taxis available in crowded districts at night.
According to Seoul City and the taxi industry, the average number of operating taxis at night is around 20,000, down 5,000 to 6,000 from before the pandemic. The number of licensed corporate taxi drivers also dropped from 31,130 in 2019 to 20,710 in May this year. And more than half of privately owned cabs are driven by those aged 65 or older -- a group reluctant to offer nighttime taxi services.
To address the dearth of cabs, Seoul City has introduced a series of policy measures. But the shortage has remained unresolved amid growing complaints from passengers struggling to hail a taxi.
Against this backdrop, the taxi fare increase is a desperate attempt by Seoul City to find a breakthrough. But whether the increased fare would attract new taxi drivers and lead to more taxis operating at night is questionable.
First of all, the positive effect of such a rate hike could evaporate if corporate taxi firms raise the obligatory daily fees that taxi drivers have to pay, thereby keeping the actual income almost the same. The obligatory target fee system was banned, but some companies still maintain the practice in an indirect way.
This means that Seoul City should come up with new measures aimed at improving working conditions of hired taxi drivers if it wants to the rate hike plan to have any real impact.
Another concern is the possibility that the envisioned taxi fare hike could put more inflationary pressure on a local economy that is already saddled with soaring consumer prices, a weakening local currency and ballooning trade deficits. Furthermore, utility rates such as electricity are scheduled to be raised in the coming months. The new taxi fare, if applied from next year as planned, will end up placing extra burden on many households.
Considering the unstable economic situation, a forthcoming taxi fare hike, coupled with the same service quality, is likely to generate complaints from passengers, making those on a tight budget more reluctant to use taxi services and opt for other public transportation like buses or subways.
From this week, the Seoul Metropolitan Government plans to collect public views about the plan to raise the basic taxi fare. It should weigh all related factors closely and explore various options before pushing for a price increase.
