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Bankruptcy warning as SA taxi profits ‘dive’

Nov 20, 2014
Operators warn thousands of jobs are on the line as they struggle to stay afloat. Photo: Nat Rogers/InDaily

Operators warn thousands of jobs are on the line as they struggle to stay afloat. Photo: Nat Rogers/InDaily

The South Australian taxi industry is warning it will go bankrupt within a year – and more than 1,000 jobs will be lost – if the State Government does not step in to help it.

Operators running more than half of Adelaide’s 1,100-strong taxi fleet told InDaily global taxi alternative Uber had caused taxi profits to plunge since its incursion into the SA market in August.

They said they would not be able to survive another year in the current cost and regulation environment, given the additional competition offered by Uber.

They are pleading with the State Government to create an “equal playing field” by reducing their fees, charges and regulation, and slapping similar fees, charges and regulation – including requiring safety cameras and fixed car global positioning systems – on Uber.

Several operators said their revenue had dropped by an average of 15 per cent over the past four months, and that 10 per cent of their taxi drivers, on average, had quit the industry during that period because of declining income.

“We guys have to give up, because what’s going to happen is the industry’s going to crash,” said Sim Singh, who operates 50 taxis in South Australia.

He says his own business will last “maybe four to five months, not even more than that” if there are no regulatory changes.

“Everybody will lose their business.”

Operators told InDaily State Government-imposed fixed expenses amounted to between $1100 and $1200 per week per taxi. This meant their weekly profit margin for each taxi owned was now between $45 and $75, and falling.

Singh acknowledged that the taxi industry itself would have to adapt to new competition and offer a better service to customers if it were to survive.

“I think we need to sort out the thinking that is running the show, that’s too backward,” he said.

“That tells of the conservative thinking of the people that are running the show of the taxi industry.

“We have to sort it out to win the trust of the public.”

Armik Bavityan has been operating and driving taxis for more than 20 years.

He told InDaily his profits have dived more than 25 per cent since August.

“After March (next year), we’re going to close our business,” he said.

“Of course I’m angry. Everybody’s angry.”

“The fees (the state government is) charging us, especially registration, is unbalanced.”

He said the fees and charges his business faced in comparison the Google-backed luxury hire car pickup service – with its intuitive mobile application, low prices, flashy vehicles and experienced drivers – had made it impossible to compete with Uber in the long term.

READ MORE: Taxis beware: Road-testing Uber in Adelaide

President of the United Taxi Association of South Australia, Trimann Gill, who runs about 70 taxis, said his business would survive a “maximum, a year” if Uber continues to grow and State Government fees and charges remain the same.

He said that over the past few years the commission taxi drivers were able to earn had reduced from around $15 per hour to $8-10 per hour.

“Because it’s a low paid job, slow and steady the drivers are exiting,” he said.

“(Many of) the jobs taxis used to do are now done by underpriced, under-regulated apps.”

He said Uber’s impact was being felt particularly strongly on Fridays and Saturdays, and in declining work to and from Adelaide Airport.

Fellow operator Bharat Kainth, who operates 40 taxis, said that taxi operators have stayed afloat on slim profit margins for years, and that “even a small impact” could sink them.

Siamak, an Adelaide taxi driver of more than 25 years’ experience, told InDaily that if the taxi industry could not beat Uber, he would have to join it.

“When I started driving taxis 25 years ago, (it was) easy money,” he said.

“It has slowly, slowly, slowly gone down, down, down.”

He blamed the State Government for imposing unaffordable costs on taxi operators and drivers.

“The government doesn’t care, and the government is looking for the money,” he said.

“If this situation (continues) in the future, the taxi is dead.

“(If) I’m not making enough money for my family, I have to help my family and do something else.”

Asked if that “something” would be to switch to driving hire cars for Uber, he replied: “yes”.

Transport Minister Stephen Mullighan told InDaily: “Uber doesn’t offer a taxi service in South Australia, it offers a booking service via licensed and accredited chauffeured vehicles”.

“‘If taxi operators have proposals to reduce costs in their industry, they should put them to Government.”

Uber is currently charging promotional prices in Adelaide, which are often similar or lower than taxi fares – although the company baulks at its requirement under hire car regulations to charge a minimum of $20 for each fare.

Uber drivers are also paid “various incentives” by the company because the prices are far below what those luxury hire car drivers would normally charge.

Managing director of Suburban Taxis, Wally Sievers, said Uber and taxi booking app GoCatch “have got the potential to decimate the taxi industry”.

“Everyone doesn’t mind competition, but competition has to be on a level playing field, and it’s not,” he said.

“Things are getting  tougher and tougher because (taxi operators) are not getting the jobs that they should be because of unfair competition…

“We have a legitimate app which gives the customers the same benefits of technology that Uber and GoCatch are doing but our app is linked to accredited drivers, and under regulated conditions.

“Whilst they might be accredited, there’s no way of really knowing.”

READ MORE: SA taxi drivers face prosecution in Uber’s wake

The Taxi Council of South Australia said there was a need for a “level playing field” in the private transport industry.

“The taxi industry rightly complies with a host of Government regulations that are designed to protect the safety and wellbeing of both passengers and drivers alike,” a spokesperson said.

“There is a cost of compliance which comes which such things as the provision of CCTV, GPS, alarm systems, police checks, insurance and licensing, among others. ”

“These are the costs associated with safely servicing the transport needs of the public and it would be unreasonable and unsafe for any new operator to expect not to have to comply.”

Uber’s Australian Managing Director David Rohrsheim told InDaily in a statement: “The taxi industry has not faced competition in a long time and are crying foul now at the thought of it”.

“Currently the SA taxi industry seems to spending far more time focusing on how to shut down competition than they do on upping their own game and providing consumers what they actually want,” he said.

“All Uber Black partners in South Australia are fully accredited hire car drivers who all meet long-standing government requirements regarding licence and vehicle standards, so calls from taxi to impose more restrictions appears self-interested rather than out of any concern for public safety.”

– InDaily contacted GoCatch for comment.

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