The taxi market is facing the greatest liberalization since the 90s


The industry, which has been preserved in the 90s, is finally catching up with the digital era of the twenty-first century. It is now being decided whether municipalities will lose decisive influence over taxi drivers or what rules should apply to Uber-type digital services. The law was preceded by several years of repeated protests by traditional platforms.

The amendment regulating the operation of taxis was debated in mid-October in the second reading and amendments began to pop up.

The key points of the law include, for example, the removal of mandatory lamps on car roofs; drivers not having to use a mechanical taximeter (they were able to adjust it as much as they like); price and mileage can be calculated by a smartphone app. These are key changes for the customers. All this seems to be an advantage of Uber or Bolt application operators.

The law also defines “taxi operators”. What seems to be a technical triviality means that digital platforms will no longer be able to make excuses for not being taxi operators. According to the law, they will be subject to rules including liability for their drivers. This is a win for traditional services.

The city council won’t crack

However, the law also has controversial points, that MPs wish to modify. These include, in particular, the powers of town halls to regulate the operation and quantity of taxis in their territory. According to the government’s proposal, the compulsory topography examinations that cities and municipalities could use to influence the influx of drivers from other cities or states will still end.

And it’s not all. “The possibility of municipalities to impose the duty of taxi drivers to prove the knowledge of topography, taximeter operation and relevant legislation is completely omitted, and the possibility of municipalities to specify the body color and minimum dimensions of taxi car are removed as well,” states transportation minister, Vladimír Kremlík.

The town hall’s powers are to be returned by the Pirates’ amendment, singed by Jakub Michálek. In addition to topography examinations, for example, examinations of legislation. Pirates themselves say that even if the proposals fail, the law is sufficient. “Prague, as well as Brno, is pushing it. I think there is not so much need to regulate the traffic in other cities. We have read the amendment, but the law, as is already prepared, is appropriate. It is perhaps the first proposal from the Ministry of Transportation, which made sense,” said Deputy Chairman of the Parliament’s Subcommittee on Transportation, Ondřej Polanský.

It was Bolt who was most often criticized for being on the edge of the law. At the end of 2018, it even received a Prague-wide ban from the Municipal Court; however, the company publicly refused to comply with the precautionary measure. “A narrow group of taxi drivers is trying to keep the municipal-level examinations in the legislation because they want to maintain barriers that prevent other players from entering the market. Removing the tests will lead to a higher quality of service for the end customer,” said the Central European Director of Bolt, Roman Sysel.

Although not explicitly written in the law, it is, of course, similar to London. The test happens at the site of the Czech authorities and in the Czech language, which can be a problem for foreign drivers. But it is not just about them, as Sysel points out: “There is no reason, for example, that taxi drivers in Karlovy Vary should have a monopoly in the city and charge excessive amounts at the Karlovy Vary festival. It’s true that both Poland, as well as Slovakia, no longer require topography examinations. They do not make any sense nowadays, but the point is that other regulations have come along with their abolition. And that’s a problem,” says Ondřej Krátký from Liftago.

In addition to London, there is yet another example from abroad. Prague, with some ten thousand taxis, is almost at the level of New York before liberalization. Following the radical liberalization of taxis, New York has reached the level of over 100,000 commercial taxi drivers, starting from the original 13,500, and is strongly responding to the problem. However, Roman Sysel does not expect that the situation should be repeated in Prague and that its streets would be overwhelmed by app drivers. “The real Bolt data from Prague clearly show that the vast majority of rides, namely 85 percent, take place outside the peak morning and afternoon hours. It is alibistic to claim that restrictions on the taxi side will in any way resolve city-wide traffic problems,” he says.

Who is to blame

What, on the other hand, remains an advantage of traditional taxis are taxi lanes, as well as reserved parking places, that are not available for alternative services. Other obligations also apply, such as for the driver to have a trade license and taxi license, the granting of which is preceded by the transportation authority backchecking the applicant’s criminal past, or the obligation to have the vehicle registered in the taxi register.

Some uncertainties surround the liability of operators for the drivers. One card may be used by someone else, and the company has no way to check, but it should be held responsible for that.

“There could be a solution, in case the Ministry of Transportation would prepare an electronic interface with the register, where it would be possible to check these things in real-time,” suggests deputy Polanský. There is yet another proposed change. Bolt advocates that a single car, already registered as a taxi, can serve multiple licensed drivers. If one car breaks down or the driver is not able to work, he would provide the car to another driver, which is not possible as of today. The proposal has already received the support of the House of Economic Committee.

The changes introduced by the law were necessary for the original legislation. It is no longer possible for things to stay the same. Even if the law remains unchanged, it will likely be supported by the Communists and the Pirates alongside the coalition, bringing together a comfortable majority.

Other European countries tend to change their views and examples from metropolises show that the right path is not always chosen. The Czech one, very liberal, at first glance, copies the less fortunate examples, but it does not necessarily mean that it will fail in the domestic environment.

Adoption of the law is important because digital services will lose their lead. They entered the market without regulations, and before the legislation caught up with them, they “sucked” the market dry. It is not just a taxi, it is a whole phenomenon of the shared economy, including accommodation platforms. When the new rules enter into force, the long-lived 90s, when the market was occupied by those with a sharp elbow, will end.


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