The plans proposed by the Construction and Transport Ministry earlier this week to cut the number of taxis came in response to rising fears about a decline in the safety and quality of taxi operations due to excessive competition following deregulation in 2002.

The planned reregulation of the industry, envisioned to take effect in 2009, may provide temporary relief for taxi businesses hit by the double whammy of dwindling customers and soaring fuel costs.

In the plans, released Wednesday, the ministry said it wanted to submit a bill on revising the Road Transport Law during an ordinary session of the Diet to be convened early next year.

The ministry's move, however, may be open to criticism that it runs counter to the government's basic policy of pushing ahead with deregulation.

Should the taxi industry choose to ignore the need to improve the quality of services by making use of the new regulations, firms will doubtless see further shrinkage in patron numbers.

Shriveling income

A Tokyo taxi driver in his 50s said: "The number of people using taxis for both short and long journeys has decreased significantly. I think there should be some curbs on the current taxi count."

Although he works 20 hours each workday–from 8 a.m. to 4 a.m. the following morning–his wages have continued to dwindle.

As of fiscal 2006, there were about 12,000 taxi companies throughout the country. This figure is a 70 percent increase from fiscal 2001, one year before industry deregulation was introduced.

During this four-year period, the number of taxis increased more than 14,000, reaching about 270,000 in fiscal 2006.

In 2005, taxi drivers' average annual income was 3.02 million yen, down from 3.34 million yen in 2001, according to the ministry.

In Sendai, known for having a particularly large number of taxis, it is not uncommon to see taxis waiting in extremely long lines to try to pick up customers.

There were 2,927 taxis in the Miyagi prefectural capital in fiscal 2006, an increase of 50 percent from fiscal 2001.

During and after April 2007, the ministry approved fare hikes in various parts of the country, with a view to helping taxi firms in financial straits.

However, the number of people using taxis has continued to fall.

Tokyo saw a rise in taxi fares in December 2007. But operating revenues on a per taxi basis for May this year were down 2.9 percent compared with the previous year, registering the sixth straight monthly year-on-year decline since December.

Step to curb competition

The ministry's planned regulation is designed to offer a helping hand to the taxi industry, which has been hit more severely than anticipated following deregulation.

Six years ago, the ministry lifted a rule restricting the maximum numbers of taxis for particular service areas. This had customer-friendly results such as lower fares and vehicles equipped with nursing care apparatuses.

However, as a result of cutthroat competition and falling revenues, many firms started calling for a cap on the number of taxis for each region.

One of the factors behind the slump in business is that most taxi users in large cities pick up taxis on the street. This means firms with lower fares and unique selling points have little competitive edge over their rivals, industry observers said.

However, if the planned reregulation benefits the taxi industry at the expense of the customer, this will merely serve to further weaken business strength within the industry in the mid- to long term.

It is therefore crucial that the issue be examined from the standpoint of consumers.

http://www.yomiuri.co.jp/dy/business/20080705TDY03102.htm