Part D – Understanding and improving industry performance (PDF ...

Trip distribution across the week, Metropolitan Melbourne, 2011
Figure 10.1 Trips by day, Melbourne, 2011
21% 21%
% of all trips
10%
11%
12%
15%
10%
Monday Tuesday Wednesday Thursday Friday Saturday Sunday
Source: TII analysis of metropolitan NSP data
Unfortunately, there are few jurisdictions with reliable data
on the profile of demand in markets which have removed
entry controls. Some limited evidence comes from
Ireland. Demand in Ireland is said to be concentrated on
Friday and Saturday with more than 60 per cent of trips
taking place at these times. 26 In Melbourne, as shown
in Figure 10.1, only 42 per cent of trips take place on
Friday and Saturday (a day is measured as 6am to 5am).
This suggests that Melbourne’s supply of taxis does
restrict the number of trips that are taken at these times.
It should also be noted that it has been estimated that
taxis in Dublin perform 40 million trips per year, with a
population half the size of Melbourne’s (~1.8 million). 27
3. Service innovation
Restrictions on licences discourage many people from
entering the taxi-cab industry, since assignee operators
and drivers earn very little after paying assignment fees.
The scarcity of licences means that the value created by
the industry tends to accrue to the licence holders and
deprives operators and drivers of earning the full benefit
of efficient, customer-focused operations.
26 Indecon International Economic Consultants (2011), The Taxi
Regulation Review – Report of the Review Group, Ireland, p.19
27 Goodbody (2009) also finds that: “The demand for cab services is a
peaked demand. Demand peaks on Fridays and Saturdays, which
together account for 73 per cent of all trips. This reflects the demand
for cabs for social and recreational purposes. The evidence is that this
peakedness in demand is increasing.” Op. Cit.
A second effect is that it prevents existing taxi operators
from expanding their operations. This may have flow-on
on effects on competition in other markets; for example,
a large operator might be interested in taking bookings
and formally becoming an NSP, but this will require a large
number of vehicles and hence licences or assignments.
The increased capital barriers created by licence
restrictions limit the potential for new entry of this kind.
A third effect is that the restrictions limit innovation in the
delivery of point-to-point transport services; in particular,
to fill niche markets that are somewhat like taxi-cab
services but also may fill other roles. The DOT submission
expresses this as follows:
Similarly, restrictions on the number of taxi licences
on issue limits the size of the taxi industry, potentially
inhibiting expansion into new areas of service. This
essentially prevents any move to introduce new and
innovative service models. 28
The inquiry received submissions from a number of
parties suggesting that the kinds of services prevented
by the licence restrictions include providing point-to-point
services at particular times or in particular locations at
particular times (such as peak periods).
28 DOT, Op. Cit., p.19
186