Taxi Deregulation in Ireland - Case Study Example

Taxi Deregulation in Ireland Table of Contents Introduction 3 Taxi Service in Ireland 4 Deregulation of Taxi in Ireland 6 Conclusion 9 References 10 Bibliography 12 Introduction The sociologists rightly claim that the only constant thing in the present world of today is the word ‘change’. With the advent of information technology and the communication process, the terms and the tricks of the trade are fast changing all across the globe. With the influential factors like that of globalisation and liberalisation, the world has become really a smaller place to live in. The pace of human lives has increased by great extent and this has forced considerable changes in the various factors that are essential to one’s life. There is little doubt that the industry of transport is one such essential service for the human life along with other services like that of heath, banking or police. The transport system especially that of the public transport; is considered as the lifeline of the society and economy. It is not possible for all citizens to own private cars and therefore commuters have to rely upon the public mode of transport. Along with various other forms like that of buses, railways and air planes, the taxi has been one of the strongest mediums for the commuters of short distances in most of the countries. Ireland is not an exception either. But there have been certain issues regarding the taxi service in the recent past and the report analyses the causal effects of those issues. Taxi Service in Ireland Ireland has been one of the developed nations of the world. The purchasing powers of the people are considerably on the higher side compared to many of their international counterparts. Therefore, it is evident that the people like to experience certain privacy in the public modes of transport. Taxi service has the required feature and therefore often the well – to – do class, who do not possess private cars depend upon taxis to commute shorter distances instead of buses. But the picture of taxi service in Ireland was much different from many of the other parts of the world till last years of the last century. The basic reason for such a different picture was the regulated nature of the taxi industry in Ireland. The government of Ireland had tremendous control over the taxi industry till 1999. The government did not any allow any new license for taxis for more than two decades, since 1978 except in 1992. It resulted in huge demand - supply mismatch in the industry. The standards of living of the Irish populace had improved considerably and also the population of the taxing riding segment increased, yet the government did not allow newer taxis to launch and run. This has also increased the waiting times of the passengers. The scenario was particularly worse in the area of the capital city of Dublin. It was in the year of 1978 when the government of Ireland brought the service of taxi within the purview of regulations. The number of taxis i.e. the taxi license holders was limited to 1,835 then. It is very astonishing that the Irish government did not allow more taxis in the next two decades except 1992. In the year of 1992, the numbers of taxis were increased by 139 after carefully reviewing the demand – supply situation of the market. Therefore, the total number of taxis that the country had till 1999 was just 1976. But the demand of the taxi service has increased considerably in all these years. The prime factors responsible for increase in demand faced in the Irish land for the taxi service has been the changes in the demographics and the popularity of tourism. The demographic factors included factors like age and gender. The tourists, especially the international tourists, visiting the country always preferred taxis to travel. A survey conducted in the year of 1995 revealed that only 23 % of the intended commuters of taxi could successfully get hold of one in the hour of need. The average waiting time for a taxi had been as high as 48 minutes. The waiting time was much more than the mentioned 48 minutes during the peak hours and in and around the city of Dublin. It was estimated by the expert organisations and the consultancy houses of the domain of transport that the market could actually accommodate twice the number of taxis that were available during the period (Fingleton & Et Al, 1997). Deregulation of Taxi in Ireland The pressure was mounting upon the government over the issue of restructuring the taxi service and taxi licensing. Many of the experts of the transport industry claimed that the market value of the taxi licenses prevailing in Ireland touched the hoping figures Irish £ 80,000. Also, there were accusations of unethical nexus among the government officials and the taxi license holders. With the limitation and regulation prevailing in distributing of the new taxi licenses, the transport industry experienced enormous growth of hackneys which were often used as the substitutes of taxis. At last, in the year of 2000, the honorable High Court of Ireland ordered the government of Ireland to lift the regulations on the distribution of new taxi licenses. The decision of deregulation, which is often regarded as the land mark achievement in the arena of public modes of transport in Ireland, was initiated on the basis of the right of the individuals to provide transport services to the public at large through taxis if they had the requisite training and skill required in the field. The honorary court of justice also observed that the citizens of the country had full rights to purchase the services offered by those service providers if they have the requisite training and skills (Barett, 2008). The increasing market value of the taxi licenses that reached approximately Irish £ 80,000 in the end years of 1990s because of the regulated market and non – distribution of new taxi licenses, also saw substantial fall in the prices after 2000 when the High Court of Ireland asked the Ministry of the Environment and Local Government to allocate new licenses to the intended taxi service providers if he was substantially qualified for the job. The sharp decrease of the market value of the licenses amounted to more than 80% and the new market value settled at Irish £ 9000 approximately (Perry, 2010). The deregulation in the licensing system of the taxi transport in Ireland straight away contributed to threefold increase in the number of taxis in the region of Dublin and the rest of Ireland. The measure also had a positive impact over the socio – economic strata of the country as it facilitated many of the able but unemployed citizens to own new licenses and provide taxi services. It was observed by Goodbody Economic Consultants that, “By the end of 2001, the number of taxis in the Dublin area had doubled from 2,700 pre-liberalization to 5,500. These trends continued, so that by the end of 2003, the number of taxis in the Dublin area had increased to 8,400. Similar trends were seen in the country as a whole. In 2000, there were a total of 4,200 taxis in the country and this had risen to 16,000 by end 2004” (Goodbody Economic Consultants, 2004). Though the demand for deregulation in the licensing system of the taxis were increasing every day from almost all corners of the society, yet the road to deregulation was not at all easy for the government. Along with the National Taxi Driver’s Union, even few of the office bearers and the formers heads of the Fair Trades Commission opposed the proposal of the deregulation vehemently. Myles O’Reilly, who has been a competition law consultant of repute and also had been the past chairman of Fair Trade Commission thought that deregulation was the last thing that was wanted in the transport industry of Ireland. According to him, many other countries where deregulation was initiated could not solve their problems at all. He advocated that instead of deregulation, the ministry could initiate an impartial and scientific survey to study and decide about granting more licenses. The other important personality of the taxi industry, Molloy Gorman, who was the general secretary of the National Taxi Drivers’ Union, was of the view that there was no need at all for the allocation of new taxi licenses. According to Gorman, it was because of inefficiencies that the scarcity was prevalent. He pointed out that if the taxis could be utilized efficiently, ideally through the two driver system, it could well solve the scarcity as then it could become a 24 – hour service. The general secretary also claimed that the decision of not increasing the licenses in the domain of taxi transport was based upon the consensus of the taxi professionals (Irish Times, 2001). Despite oppositions from the few of the quarters, the government of Ireland adhered to the order of the honourable High Court and the licensing system in the taxi industry was deregulated. Such a decision brought sea changes within the industry. It was observed that the number of taxi cabs in Ireland almost tripled within the two years of 1999 to 2001. Another major happening in the Irish economy because of the deregulation was that the overall drop in market entry cost was almost 75%. The allocation of the licenses was prohibited in the last two decades except that of 1992 and this had contributed to inefficiencies and monopolies among the existing owners and drivers. The deregulation called for open markets and liberalisation and it helped actively to drop down the prices as well as wait times. In the period between 1997 and 2001, it was observed that the waiting times fell from 75% in 1997 to 53% in the year of 2001 (NCPA, 2004). The deregulation was a must for the transport industry of Ireland because of the continuous failure to adhere to the market economics. The deregulation brought in many positive and welcome changes within the economy and the society of Ireland. It has been already discussed that the changes increased efficiency with in the domain. As it considerably reduced the waiting time, it also helped in saving man-hours. The standards of the service increased many folds. The complaint redressal system was more active in the liberalised regime. Most importantly, deregulation promoted market economics and therefore prices are now fixed depending upon the factors of supply and demand and not on the basis of monopoly and artificial scarcity caused by the cartel of the taxi owners and taxi drivers (Fingleton & Et Al, 1997). Conclusion The deregulation of the taxis has undoubtedly been a major achievement in the Irish society and economy. It should always be remembered that it is for the welfare of the society and its citizens that laws and regulations are required and not the other way round. One cannot and should not prevent the development and undermine the needs of the people excusing the laws of the land. The high court of Ireland judged the case perfectly and also the Government of Ireland performed the order in its true sense and spirit. The economy definitely received a great boon from the measure as the market efficiency returned and prevailed. As human needs are changing continuously, so should change the law as per the requirements and that can prevent collision in the society. References Barett, S. D., 2008. Regulatory Capture, Property Rights and Taxi Deregulation: A Case Study. Wiley Economic Affairs. [Online] Available at: http://www3.interscience.wiley.com/journal/118879568/abstract?CRETRY=1&SRETRY=0 [Accessed March 11, 2010]. Fingleton, J. & Et. Al, 1997. The Dublin Taxi Market: Re-regulate or Stay Queuing? Taxi Library. [Online] Available at: http://www.taxi-library.org/dublin.htm [Accessed March 11, 2010]. Goodbody Economic Consultants, 2004. Economic Review of the Small Public Service Vehicle Industry. Commission for Taxi Regulation. [Online] Available at: http://www.taxiregulator.ie/files/publications/Economic_Review_March_2009.pdf [Accessed March 11, 2010]. Irish Times, 2001. Taxi deregulation decision ‘seemed unreasonable’. Article. [Online] Available at: http://www.taxi.ie/unreasonable.shtml [Accessed March 11, 2010]. NCPA, 2004. Taxi Deregulation Good for Consumers. State and Local Issues. [Online] Available at: http://www.ncpa.org/sub/dpd/index.php?Article_ID=3990 [Accessed March 11, 2010]. Perry, M. J., 2010. Ireland’s Shift from Taxi Cartel to Deregulation. MrSwing. [Online] Available at: http://www.mrswing.com/articles/Ireland_s_Shift_From_Taxi_Cartel_to_Deregulation.html [Accessed March 11, 2010]. Bibliography Button, K., Transport Economics, Elgar, 1994. Chamber of Commerce – Dublin, 1997. Taxi Services in Dublin. Taxi – Library. [Online] Available at: http://www.taxi-library.org/dublincc.htm [Accessed March 11, 2010]. Mangan, J. and Hannigan, K., Logistics and Transport in a Fast Growing Economy, Irish Management Institute, 2000 OECS, 1999. Ireland. OECD Economic Surveys. [Online] Available at: http://website1.wider.unu.edu/lib/pdfs/OECD-ES-Ireland-Volume-1999-Issue-14.pdf [Accessed March 11, 2010]. Thomson, A.W.J. and Hunter, C.L., The Nationalised Transport Industries, Elgar, 1993. Read More