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

Inquiry findings
è The inquiry considers that, under the existing
structure, the cumulative costs associated
with attracting current operators into a new
network presents high barriers to entry for new
competitors in this market.
è The continuing existence of quantitative
restrictions on licence numbers strengthens
the case for removing mandatory affiliation.
è The barriers to entry in becoming a new
taxi network under the current model are
to some extent preventing new competitors
from emerging.
11.7.3. Price of NSP affiliation
A number of taxi operators emphasised to the inquiry
that they consider themselves as ‘customers’ of NSPs,
along with taxi users, arguing that this point is often lost
in discussions about the structure of the industry and
competition issues. One taxi operator sums this up:
We operators pay a fee to NSPs so they can find
us jobs. As simple as that. That makes us, together
with drivers, customers and we want our rights
to be protected. 59
These operators note that NSPs derive their core revenue
by charging an affiliation fee for each vehicle, in addition
to also charging fees for ancillary services.
In Melbourne, the affiliation fee is currently approximately
$7,000 per annum, with both of the dominant providers
having comparable charges. Fees for the smaller outer
suburban networks are significantly higher than this. In
regional areas, affiliation fees are much higher, as much
as $14,000 per year. Figure 11.6 provides a summary of
NSP affiliation fees supplied to the inquiry.
Figure 11.6 Comparison of NSP affiliation fees
Figure 11.6 Comparison of NSP affiliation fees
$16,000
Annual affiliation fees 2012
$14,000
$12,000
$10,000
$8,000
49,000
$6,000
$4,000
$2,000
0
Geelong Taxi Network -
Conventionals
Silver Top Taxis
Black Cabs
Ballarat Taxis Platinum Taxis Frankston Cabs -
Commercial Rate
Source: NSP information provided to the TII
59 Alex Saltikov, Submission to the Taxi Industry Inquiry, SS95, p.1
244