Canberra Airport - Rego ACT - ACT Government

ACT Taxi Industry Review
Canberra Airport
May 2010
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1. Impact of Inadequate Taxi Services
Put simply the taxi services currently provided in the ACT are:
• costing the ACT and its community business and new jobs;
• adversely affecting the image of Canberra as the nation’s capital city; and
• not provided to an acceptable level.
There are not enough taxis on the road at peak times, there are too many bookings being made
which are not met, and the service is too unreliable to be used by business travellers.
As a result, instead of our city appearing efficient and cost effective, it appears difficult to get
around, inefficient and totally unreliable.
The cumulative affect of the inadequate taxi service is a cost in business for the ACT.
Conference organisers are refusing to consider Canberra for large and small conferences and
conventions simply because of the reputation of the taxi service in the ACT – while this has a
huge impact on the local economy, it is also an unacceptable situation for the National Capital
of Australia.
Examples of Poor Taxi Service
There are numerous and continuous examples of the unavailability of taxis to the ACT
community. This occurs not only at peak times of the day and not only during peak weeks of
the year, for example parliamentary sitting weeks. It happens at many different times of the
day and in non parliamentary sitting weeks - it is just that it is even worse at peak times and
during parliamentary sitting weeks.
Some of the examples that demonstrate how the lack of taxi service manifests itself are as
follows:
(a)
People seeking to catch a plane out of Canberra early in the morning are simply unable
to book a taxi with any reliability. The taxi service states that when you make a
telephone booking for a taxi the next morning, it is not a booking rather it is merely an
expression of interest which they would hope to try and fulfil. Further any such
expression of interest for an early morning taxi needs to be booked at least one hour
earlier than when the taxi is required. Both of these situations are wholly unacceptable
in a modern city in the 21 st century.
It is the Airport’s submission that until the taxi industry gets to a situation where people
can make bookings, for example early in the morning, with the reliability that they will
be picked up and that they are treated as bookings rather than mere expressions of
interest, then there clearly needs to be more taxi plates issued.
In addition it should not be necessary to make a booking for a taxi more than 15 minutes
before it is required to pick one up – especially at 5 o’clock in the morning. Again until

this situation is rectified, there is clear evidence under this metric that more cabs are
required on the road.
(b) There will often be no taxis at Canberra Airport in the morning. Each weekday the
arrival of planes commences at approximately 8:15 - 8:20 and yet by 8:30 - 8:35, the
available taxis have been reduced to zero and the taxi rank is bare. This occurs almost
every weekday, including non parliamentary sitting weeks. The remaining passengers
that need taxi services generally number 60 - 80 but in peak weeks will be as high as
200 - 250 people. These people are only serviced by the ad-hoc arrival of 1-3 taxis that
might arrive every 1 - 3 minutes. This is not the way that Canberra, as the National
Capital, should be presenting itself at its entry and welcoming point to the city.
The same situation plays itself out during the rest of the day at various other times when
aircraft arrive, including 10:15 - 10:30, 3:00 - 3:30, and 4:30 - 6:00 to differing degrees.
This situation is not caused by poor traffic to the airport (this is now resolved), it is not
caused by the taxi industry withdrawing commissionaires at the Airport, it is not caused
by a lack of drivers; it is simply caused by a lack of taxis in the market place.
It might be said that these problems could be resolved by airport passengers using other
modes of transport including buses or high occupancy taxis. This is simply not correct. The
airport provides a bus and has on different occasions for weeks at a time provided free tickets
to the Airliner bus direct to the city. Given that the bus stop was only 10 metres in front of
the taxi rank, one would expect a modal shift to the bus. This does not occur because
business travellers want a taxi. The reality is that business travellers want to be taken directly
to the address for their meeting, not merely to some bus interchange in the middle of the city
from which they have to face the challenge of navigating to an unknown destination at an
unknown time distance away when they may already be running late for an important
meeting.
Further, whilst the airport has strongly supported the establishment of a HOTS service and
facilitated that through cost free commercial arrangements offered to the taxi industry, the
reality is that this will only improve the situation marginally because business travellers do
not generally wish to multiple hire or share taxis. Business travellers often need to make
telephone calls that are confidential and private in nature. The simple reality is that airport
passengers lined up in the taxi queue want a taxi to take them directly to their destination and
they want the privacy to be able to conduct their business while they are in transit. The
business is there but the taxis are not.
In the Airport’s view many of the issues surrounding the taxi industry arose of the then ACT
Government decision to freeze the issue of taxi plates in 1995 with a result that no taxi plates
were issued for the following 11 years. This action has ultimately resulted in the taxi industry
being unable to meet the demands of users.
However, there are two observations that need to be made in relation to the issuing of the 90
new leased licence plates between 2006 -2008:
1. Despite claims from the taxi industry that the value of taxi plates themselves would
collapse, that the licences would not be taken up and that the industry as a whole would
fall apart, none of these eventualities occurred. In fact, the number of privately held taxi

licences sold increased in 2006 and 2007 and the average price of those licences
increased between 2005 and 2007 by 15% from $264,000 to $296,000.
2. Secondly, the number of drivers in the industry increased by more than 20% between
2006 and 2009 – from 1068 drivers to 1263 drivers. This highlights that additional jobs
are created in the ACT through the release of taxi licence plates.
The greatest problem with this current taxi review is that it is being undertaken in
circumstances where there has been a freezing in the balloting and issuance of licences since
2008. Notwithstanding the fact that 50 new licences were issued through ballots in May and
October 2008 – all of which were taken up – we are now facing a situation where it is likely
to be at least 2 years between ballots for taxi licences. Given the unmet demand in the system
and the services concerns this is a wholly unacceptable situation.

2. Should There Be A Cap On The Number Of Taxi Licences
Canberra Airport agrees with the basic proposition of the OECD Report that the removal of
the cap on the issuing of licences improves consumer welfare and that the restriction on
competition is unjustified and results in less than an optimal result for consumers. This can
be seen now in Canberra, where consumer satisfaction with taxi services has substantially
declined with little incentive on the taxi industry to address those concerns due to the closed
nature of the market. Indeed the simple reality is that the taxi industry is in complete denial
about the extent of the problems and through self interest opposes the very measure that will
fix the problem – more taxis on the road.
Recommendation 66 of the Commonwealth Government’s Henry Tax Review states that the
quantity limits on taxi licences should be phased out. The report notes that the restrictions on
licences “are beyond those necessary to maintain service standards or safety and are simply
used to raise revenue.” The Review notes that in terms of dealing with the transitional
problem for existing owners, other than conducting a buy back, the price for licences (i.e the
capital sum or the annual licence fee) could be reduced incrementally over time.
The reality is that the taxi industry does operate in many cities in the world without a cap on
licences and does so without compromising safety or quality of service standards – indeed the
quality of service is substantially improved. In particular Canberra should look to the national
capital of New Zealand, Wellington, as being a similar size city with a similar culture and
value system in nature which successfully operates with a completely deregulated and
uncapped taxi market.

3. How Many Taxi Licences Do We Need
If the Government wishes to answer this question, the first thing it must acknowledge and put
at the top of its requirements and key factors list is that Canberra is a city that exists to fulfil
its role as the National Capital. As a consequence, it has a significant role in servicing the
Australian Government and it must operate in such a way that facilitates the conduct of
Government business and meet the needs of those engaging in business with the Government.
In short, as a result of being the National Capital, Canberra has a significantly higher
requirement for numbers of taxis operating on the road than other cities, due to the high level
of government business and business travel.
The extent of this is underlined by comparing the population of various capital cities in
Australia to the number of airline passengers that travel to that city, noting of course that in
Canberra there is a higher proportion of business travellers (who have a greater requirement
for taxis) than for leisure passengers.
Table 3.1 - Airport Passengers Numbers Vs Population
Population
Airport
Passengers
Airport PAX Per
Head Of Population
Wellington NZ+ 478,600 5,374,000 11.23
Brisbane 1,950,000 18,711,039 9.60
Canberra 345,600 3,149,166 9.11
Hobart 213,000 1,874,437 8.80
Sydney 4,400,000 32,993,572 7.50
Melbourne 3,900,000 24,882,230 6.38
Perth 1,600,000 9,612,102 6.01
Adelaide 1,170,000 6,841,747 5.85
~ Data as provided in ACT Government discussion paper (Aug 2009)
+ Taxi plates estimate only. Population data for Wellington region from Statistics NZ
* Pax numbers from BITRE data available online (calendar year 2009)
The above table indicates that Canberra has one of the highest ratios of airline passengers to
city population. This in itself means that in Canberra there is a much higher requirement for
taxis than other cities as many of those airline passengers will require taxi services. As such,
when examining the ratio of taxi plates to population in cities, one has to keep in mind that
Canberra needs more taxi plates for its population (on a proportionate basis) than cities such
as Perth and Adelaide and substantially more than Melbourne and Sydney (which also have a
highly functional and available public transport system) simply because proportionately it has
a greater number of airline passengers.
Accordingly, an appropriate metric (amongst others) to examine the question of taxis
appropriate for a market is the number of airport passengers per taxi plate:

Table 3.2 - Taxis Vs Airport Passenger Numbers
Taxis
Airport
Passengers
Airport PAX Per
Taxi
Brisbane 1,867 18,711,039 10,022
Canberra 333 3,149,166 9,457
Hobart 261 1,874,437 7,182
Adelaide 1,039 6,841,747 6,585
Sydney 5,210 32,993,572 6,333
CBR Option 1 500 3,149,166 6,298
Melbourne 4,020 24,882,230 6,190
CBR Option 2 600 3,149,166 5,249
Perth 1,849 9,612,102 5,199
Wellington NZ+ 1,970 5,374,000 2,728
~ Taxi data as provided in ACT Government discussion paper (Aug 2009)
+ Based on year end Mar 09 passenger numbers. Taxi plates estimate only
* Pax numbers from BITRE data available online (calendar year 2009)
As the above table shows if Canberra had in the order of 500 taxi plates, we would have a
ratio of taxis to passengers approximately equal to Sydney and Melbourne, yet they have
significant public transport infrastructure.
At 600 taxi plates, we would still have a poorer ratio than Perth, notwithstanding our
significantly greater business travel and weaker public transport system.
This analysis shows that at a minimum – to just to meet the standards of other cities -
Canberra requires 500 to 600 taxis (noting that we would then still then have a service
substantially less than that provided at Wellington). The question is of how to get there and
this includes issues of transition, reducing the cost of Government charges and improving the
training and structure of the industry.
It is our recommendation, as indicated below, that whilst a cap is removed on the total number
of overall taxi licences, that the number of licences to be issued be restricted to a certain
number of licences per annum for the next 5 to 10 years as a method of incrementally moving
to market equilibrium and allowing the industry to adjust.

4. How Many Taxi Licences Should Be Issued
While Canberra Airport believes that there is an immediate unmet demand for at least 130 -
150 taxis, it is recommended that there be an initial ballot of 75 - 100 additional taxi plates.
It is then recommended that the Government ballot off an additional 40 - 50 taxi plates per
annum for the next 5 to 7 years. Subject to our comments below on varying the number
plates in each ballot, these ought to be done in half yearly issuances of between 15 and 25
plates and we would suggest that the first half yearly ballot after the initial 75 -100 plates be
for 15 plates.
We would also propose a simple mechanism for varying the number of plates available at
each six monthly ballot as follows:
(a)
if 5 or more plates fail to sell at a ballot - then at the next ballot, the number of taxi
plates available would reduce by the number of unpurchased taxi plates in the previous
ballot;
(b) if all plates are purchased at ballot - then the number of plates made available at the
next ballot would be increased by 5; and
(c)
if less than 5 plates fail to sell at a ballot, but not all the plates are purchased – then there
would be no change to the number of plates available for purchase in the next ballot.
This is a simple and effective mechanism to ensure that the market is supplied with additional
taxi plates to meet growing market demand as well as adjusting for the historical shortfall in
supply in a measured way which ensures that the market will not be flooded.
It should not be forgotten that the issuance of additional taxi plates will create additional jobs
in the Canberra economy – directly through the employment of additional drivers and
secondly through the flow on business that will be created by recapturing some of the lost
convention business that Canberra is currently missing out on.
It is forecast that the initial ballot of 100 additional licences would create between 120 and
150 new jobs in the ACT.
In addition, the issuance of additional taxi plates is an important road safety issue for the ACT
– the availability of more taxis will assist in reducing the incidence of drink driving, and
violence in late night taxi queues in Civic. In this regard, it needs to be acknowledged that the
bus service in the ACT does not have sufficient frequency or availability of service in late
night hours, resulting in a corresponding increase demand for the provision of taxi services.
This mechanism of regular supply of taxi plates ensures that if estimates of unmet taxi plate
demand are wrong or if circumstances change, then the Government will receive signals from
the ballot on a six monthly basis as to how many taxi plates are required. The simple fact is
that if there are too many plates to be financially sustainable then investors and drivers will
not take up the additional 15 - 20 plates that might be available at any particular auction. It
must, however, be recognised that such an outcome may not imply an over supply in the
market but rather that the market has reached an equilibrium. Subsequent ballots would result

in the issuance of additional licences equal to the market’s assessment of the unmet demand
for taxi plates and taxi services.
No matter what form of benchmarking the Government might implement in relation to trying
to determine the number of taxi plates to issue, it will always run the risk of being wrong in
the eyes of the taxi industry or consumers. However, a mechanism such as that described
above will allow for the regular availability of plates, but also provide true signals and advice
to Government and the market as to the current financial sustainability of the market.

5. Peak Period Plates
Canberra Airport submits that Peak Period Plates are a device used to remedy existing failings
in the market – it is a situation where the regulator attempts to “fix” supply and demand at a
particular time because the regulator has been unable to “fix” supply and demand for the
market in general. The operation of Peak Period Plates is complex, is difficult to enforce and
is really just a symptom of a market with structural failings.
Accordingly, in pure market terms, the only situation in which Peak Period Plates should be
required would be where either:
1. An inadequate number of plates is being supplied for the general market; or
2. The annual licencing fee for normal plates is set at too high a level to allow normal taxi
plates to be financially viable to cover both the demands at peak period times and the
lulls in non-peak times.
Accordingly, in our opinion, the better solution is not to have Peak Period Plates but rather to
ensure that there is an uncapped system of issuance of taxi plates and secondly that the annual
licence fee is not set at a prohibitive level.
Having said that, given the critical shortage of taxis at peak periods throughout Canberra,
Canberra Airport would welcome any solution that resulted in an immediate increase in the
number of available taxis – if the only way to do this is through the issuing of Peak Period
Plates, then that solution needs to be adopted as a matter of urgency.

6. Licence Fee
In order to improve the quality of service of the taxi industry while at the same time releasing
more plates, it will be necessary to substantially lower the annual licence fee charged by the
ACT Government. The annual licence fee of $20,000 is currently causing higher fares, lower
returns to investors, and lower incomes earned by drivers, consequently resulting in
reductions in service quality while limiting the ability of the Government to issue more plates.
In our opinion the licence fee should be reduced from $20,000 to $1,500 per annum, but in
any event it should not exceed $5,000 per annum in any circumstance. To ensure equity
across the industry this reduction should apply to both existing and new taxi licences, and to
ensure that the full benefit of this reduction is passed on to drivers and investors, Canberra
Airport submits that the current fare levels should not be reduced.
The reality is that the loss to the community and to the city through poor quality of service
and lost business is much greater than the revenue lost by the Government through this
proposed reduction in licence fees. It is a taxing impost on an undersupplied industry that is
reducing the number of taxis that can viably and sustainably afford to operate in the market.
A reduction in the fee in this way is consistent with the Henry Review Tax Reforms.
In relation to Peak Period Plates, it is recommended that the licence fee is set at no more than
$500 per annum.
As an alternative to reducing the licence fee with immediate affect, this reduction could be
phased in gradually over the next five to seven years, with an immediate reduction to $15,000
per annum, then a reduction to $10,000 per annum in two years time, followed by a reduction
to $1,500 per annum two years after that.

7. Service Performance
In relation to the actual performance of taxis, as noted previously, all indicia of customer
satisfaction appears to be on the decline rather than on the improve. In this context, Canberra
Airport believes that performance measures are an integral part of ensuring good customer
service. At a minimum these performance measures should cover the following:
• Availability - time - One of the most important elements is that taxi co-operatives are
able to provide taxis on a 24 hour basis. It is not acceptable that one of the companies
involved in providing taxi services to Canberra Airport is only able to provide vehicles
up to 10:30pm.
• Availability – in service - Performance measures must be implemented to ensure that a
specific percentage of the fleet is available at all times – this is particularly important in
relation to peak periods. At the moment owners decide if their taxi is going to be
available or not and often that decision is based on their own personal circumstance
rather than the need of the market, the customer or the wider industry.
• Assessment of Service - Canberra Airport believes that an independent assessment of
customer satisfaction should be undertaken on a regular basis and should include issues
such as:
o
o
o
o
o
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compliance with booking arrangements;
the drivers knowledge of the Canberra region;
the standard of presentation of both drivers and the vehicles;
the visibility of driver identification;
the implementation of a complaints system and resolution of those complaints;
the availability of EFTPOS facilities; and
the performance of the driver.
The above are just examples of performance measure that could be considered – the point is
that we need to have an open discussion about these measures and how they can best be
implemented across the taxi industry.

8. Fare – Commercial Viability And Deregulation
Canberra Airport accepts that a number of our proposals will have a commercial impact on
the taxi industry. Notwithstanding this, Canberra Airport does not support the complete
deregulation of the determination of the fare – Canberra Airport is concerned that if the
determination of the fare is completely deregulated there is a potential for a marked decrease
in the service offering and quality provided to the end consumer. (With reductions in fares as
a result of greater competition through an open market, there are inevitably cost cuts and
service reductions).
Canberra Airport is a supporter for the pricing and structure of fares to allow for the recovery
of all costs associated with the taxi industry including the provision of commissionaires, staff
training, uniforms, performance measure implementation, costs of licences etc. In this regard,
Canberra Airport accepts that the taxi industry is a commercial business and should be
allowed to function that way. There needs to be an acknowledgement that with higher service
standards, more plates and with our smaller population base, fares cannot be set at a similar
level as the larger locations - it is in some ways only natural that our fares should be higher.
If we are to increase the number of plates (something that Canberra Airport believes is
essential), at the same time implement a series of performance measures, as well require the
provision of commissionaires at certain taxi ranks (something that Canberra Airport believes
is essential to the efficient operation of the taxi industry), and given our smaller population as
compared to the larger cities - then there will be additional costs which will need to be
included in the taxi fare.

9. Canberra Airport
As we have raised on many occasions, there is no doubt that the supply of taxis for passengers
utilising Canberra Airport is a matter of significant concern and one that reflects poorly upon
Canberra as the Nation’s capital. In this regard, and for your information, we attach
correspondence and photos which indicate the unavailability of taxis for members of the
public who use Canberra Airport. You will note that for the most part these lines, which have
developed due to the unavailability of taxis not because of any failure of infrastructure at
Canberra Airport, have occurred during normal hours when one would have expected that
taxis would be available to provide the necessary services.
In Canberra Airport’s opinion, many of the issues surrounding the provision of services at
Canberra Airport can be resolved by implementing a number of the matters that we have
discussed above. In particular Canberra Airport believes that taxi services at the Airport
would be greatly improved through the following:
• The immediate release of more taxi licences – ideally Canberra Airport believes that
these should be full taxi licences, but if not, at a minimum there need to be peak period
taxi plates issued immediately as discussed above.
• The provision of HOT services – Canberra Airport has offered on a number of
occasions a dedicated rank for these services. Canberra Airport believes that these
services would be particularly effective given that many passengers are travelling to the
Canberra CBD.
• The implementation of a rigorous set of performance measures – Canberra Airport
believes that these performance measures would improve the general service experience
for customers of the Airport, as discussed above.
• The provision of a commissionaire – as with other airports we believe that a
commissionaire at the airport organising the efficient provision of taxi services to the
public is essential during peak hours. As noted in our submission above we believe the
cost of such a commissionaire should be built into the fare imposed by taxi operators.
The Airport does not support additional surcharges being imposed on taxi customers who are
picked up from the Airport. Such a tolling or increased fare mechanism is not only totally
inequitable but would represent an additional tax being imposed on taxi customers due to the
market failure of the restriction in supply of taxis. Quite simply, before one even
contemplates such a policy, one must first issue more taxi plates and remove the cap on their
availability.

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