National Taxi News Roundup

13CABS expands its illegal Private Hire fleet to Victoria

All P2P vehicles operating without a taxi or hire car plate are still operating illegally and that includes 13CABS’ Private Hire cars that are operating with ordinary licence plates in NSW, South Australia and now also on the Mornington Peninsula in Victoria.

Last week 13CABS put six new ‘taxis’ with ordinary plates on the road on the Mornington Peninsula allegedly to meet demand. Although they are marked “Private Hire” they charge the same as taxis and get bookings through the same MTData system. Whether they have taximeters and cameras and pick up rank and hail like taxis, has not been revealed.

The former CEO of the Victorian Taxi Association and now general manager of 13CABS in Victoria, David Samuel, told Fairfax Media “owners were unwilling to buy new taxi licences given the uncertainty surrounding the industry”. Who can blame them? Well, probably all those licence owners who are used to collecting $23,000 p.a. in rent for their plates. Believe it or not, there are still people paying this kind of money to lease a private or government plate that will cease to exist once the government buy-back is completed next year.

Aaron de Rozario, CEO of the Taxi Services Commission, said the Commission was aware of the unlicensed cabs and “is working with 13CABS to understand how they intend to operate these vehicles”.

That guy should audition for the Melbourne Comedy Festival.

Mr Samuel also stated that 13CABS has no plans to extend its private hire fleet beyond the Mornington Peninsula. A blatant lie. Cabcharge managing director and CEO Andrew Skelton announced at the company’s Annual General Meeting in November that part of its strategy going forward is to expand its fleet of private hire vehicles.

Uber claims to have 6,500 driver-partners in Melbourne. Whilst most may have obtained a hire car driver authority, none of them has their vehicle registered as a hire car, which still under Victorian law requires an upfront payment of $40,000 for the licence.

Well, when you have a government that ignores its own laws, rules and regulations why wouldn’t Uber and 13CABS? And why wouldn’t we all?

Price fixing going strong in Sydney

In its wisdom, the NSW government introduced a four-year moratorium on the issuing of new taxi licences last year at the request of the NSW Taxi Council. It has enabled the Sydney networks to continue to manipulate the market and demand $375 a week in lease fees from operators ($19.500 p.a.). All the Uber drivers pay is an annual business use registration fee of $331. 13CABS claims it has a waiting list of people wanting to lease Sydney taxi plates. It also claims to have trained and had accredited more than 4,000 new taxi drivers this year, double its annual average. Not surprising as the English test has been scrapped and the training, which until the start of 2016 cost around $900 and took 3 to 4 months to complete now cost next to nothing and takes only a few hours.

UberX drivers just love it. Getting a taxi driver accreditation gives them a fallback position should Uber deactivate them or should they decide that thrashing their own car is not such a hot idea.

And plate owners, new and old, big and small, absentee ‘landlords’ and taxi networks, they still reap an extraordinary return on an asset which has dropped in value from $500,000 to less than $200,000 over the past three years. It even beats being a slum landlord.

Since 18 December 2015, when NSW Transport Minister Andrew Constance announced the legalisation of ridersharing and proposed reforms to the taxi and hire car industries, he conned drivers and operators into believing that his aim was to create a level playing field. Well it doesn’t take Einstein to work out that the only way to achieve that is by lowering the cost of operating a taxi so fares can come down enough to compete with rideshare companies without hurting the income of the drivers.

By declaring a 4-year moratorium on new plates, Constance has effectively sabotaged any fare reduction and his review of CTP insurance appears to have hit a dead end with taxi operators still paying up to $9,800 p.a. in premiums while UberX drivers are paying about $700.

There are already operators struggling to find drivers for Friday and Saturday night shifts as an increasing number of cabbies moonlight for Uber in their own cars on those nights to benefit from the inevitable surge pricing.

In November a Sydney Silver Top owner-driver decided to retire after 20 years with the network and went to the management asking if they could lease out his plate. He was told to come back to them in the New Year and they would see what they could do for him. Thoroughly pissed of by their attitude he went straight to 13CABS where he was welcomed with open arms and his first monthly payment of $1,625 arrived in his account three weeks later. If that’s how Silver Top treats its owners one can only imagine how poorly it treats its operators and drivers.

Fixed fares are catching on

Whether it was in a bid to differentiate itself from the competition or beat Uber to the punch, in July this year Australian taxi booking app ingogo introduced fixed fares, not as an additional option to metered fares, but as its only option. While it has gone down like a treat with its corporate clients it hasn’t gone down at all well with most of its drivers. Say a rider (passenger) is quoted $30, regardless what happens during that trip, that’s what he will be charged on his ingogo account. Should he decide along the way to stop at Macca’s to get some food, ingogo suggests the drivers ‘negotiate’ an additional payment and charge it through the EFTPOS or in cash. The potential for conflict and under-quoting is obvious.

Taximeters have been in use since 1897 and there is a bloody good reason why they are still being used. They are the most honest and fair way to calculate a fare. Fixed fares rely on predictions, not reality, and often complicate what would otherwise have been a straightforward transaction.

Back in the US of A Uber had already begun trialling fixed fares for UberX rides and in June introduced them in select cities. Not that the concept was new to Uber, it has been charging fixed fares for its UberPOOL service for the past two years.

UberPOOL enables riders to book a share-ride with strangers going in the same direction at a fixed price substantially cheaper than UberX.

The company says it will launch UberPOOL and fixed fares for UberX in Australia early next year and rather than showing its surge pricing as a percentage on its app, it will show up front the actual amount the rider will be charged. That ought to motivate a few people to go back to catching cabs instead.

Unlike ingogo drivers, UberX drivers will not be allowed to negotiate a separate payment should the rider decide to stop at Macca’s for 10 minutes or whatever, drop off a mate or change the destination. How the Uber algorithms overcome such ‘known unknowns’ remains a mystery.

Not to be outdone Yellow Cabs in Brisbane announced this month it too will be introducing fixed fares in January. However, unlike ingogo and Uber, the network’s general manager, Bill Parker, says they will only be available on request. Evidently, if a driver accepts a booking with a fixed fare it will be displayed automatically, not only on his MTData screen, but also on his meter.

Fortunately we have an ever-growing variety of booking services to choose from. Three new taxi apps have, or are about to be launched – Rydo, Oiii and CabCue and there are rumours of more to come. Whether any of them have the wherewithal to compete with the established taxi networks, Uber, ingogo and goCatch should be interesting to watch.

Cashing in

Cabcharge has been busy in 2016 selling off what it calls non-core assets. First it was its Sydney headquarters in Darlinghurst, which it sold in June to an Asian group for just over $18 million. It is estimated to involve $4.3m in capital gains tax being paid. The company will lease back the building for the next two years before moving to its 13CABS HQ in O’Riordan Street, Alexandria.

In July it began negotiations with ComfortDelGro to sell it its 49% stake in their joint venture bus company ComfortDelGroCabcharge that was started in 2005 when they partnered to buy Westbus in a fire sale. They have since taken over a string of smaller bus companies growing the business to be the largest bus company in Australia. The deal was finalised in December. Cabcharge will receive $186 million for its share. However, it is subject to Foreign Investment Review Board approval and the sale is due to be completed in late February.

There is also talk that Cabcharge plans to sell its share in another joint venture with ComfortDelGro, their taxi, private hire vehicles and coaches business CityFleet in Britain. It is understood that the Cabcharge stake in CityFleet is worth about $40m, and while the operation is not formally on the market, sources say the Australian company would be a seller at the right price. Again ComfortDelGro would be the most likely buyer.

However, an interesting scenario is opening up. In 2010 ComfortDelGro bought Perth’s largest taxi company Swan Taxis for $38.8 million. It was speculated at the time that Cabcharge had tried to buy it but was knocked back by the ACCC and that CDG only bought it to prevent Cabcharge competitors from getting their hands on it. Given that the WA government has legalised Uber and that the second largest taxi network in WA, Black & White Cabs, is owned by Black & White Cabs in Brisbane, flogging Swan to Cabcharge would be unlikely to meet resistance from the regulator today. Cabcharge could simply swap its CityFleet stake for Swan Taxis.

Queensland taxi owners’ new best friend

Premier Annastacia Palaszcuk and her hapless Minister for Transport Stirling Hinchliffe have very few friends left in the Queensland taxi industry especially amongst plate owners following the legalisation of ridesharing and the disastrous impact it has had on taxi industry stakeholders from the drivers and operators to plate owners. As far as taxi people go the Labor Party is dead meat and so is the Liberal National Party, which voted for the government’s reforms. Only Rob Katter, Member for Mount Isa and son of Bob stood up for the taxi industry in Parliament.

It is expected that Ms Palaszcuk will call an election in March or April and no doubt Bob Katter’s Australia Party will experience a marked increase in votes, however there is a new, well ‘old’ girl on the block who plans to take on the political establishment big-time.

Earlier this month before a gathering of taxi owners in Marcoola on the Sunshine Coast, Pauline Hanson said, in reference to the way the taxi industry is being treated, “What is happening is unfair, unjust and needs to change”, and she vowed to make their concerns an issue in the state’s election.

Pauline Hanson’s One Nation will be fielding 36 candidates, most of them in marginal country seats and in every one of them there are taxi people who have been or will soon be badly hurt financially by the government’s reforms - people with families and friends which could cost the sitting members their seats, regardless of which major party they belong to.

The world was taken by surprise by Brexit and Donald Trump. From an Australian perspective those events will pale into insignificance should One Nation win the balance of power in the Queensland Parliament. Could even happen in Western Australia where she is scouting for ‘suitable’ candidates. It goes to the polls on 11 March 2017. Wouldn’t that be a hoot?

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OZ Cabbie February 2017

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