The South African National Taxi Council (Santaco) on Monday voiced its concerns about the state of the taxi industry on the first day of the Competition Commission’s land-based public passenger transport market inquiry, which is in its information gathering phase.

The inquiry will look at various themes, including price setting mechanisms, price regulation, route allocation, licensing and entry regulations, allocation of operational subsidies, transport planning and transformation.

The commission has received submissions from various stakeholders; some stating that there is a lack of regulation or adequate enforcement of the applicable regulation owing to a large informal sector – minibus taxis; and some raising concerns about the negative impact of subsidies to other models of public transport and its impact on competition.

Additionally, submissions from stakeholders pointed to limited coordination and misalignment between planning and licensing functions.

The issuing of operating licences to operators within the transport industry is the function of the Provincial Regulatory Entity (PRE); however, municipalities, as transport planning authorities, make recommendations to the PRE to approve operating licences.

A number of submissions alluded to the fact that municipalities take a long time to provide their recommendations to the PRE, resulting in a backlog of applications which has led some operators to be on the road illegally.

In addition, municipalities have emphasised that their recommendations to the PRE are not binding and that the PRE may take a decision to issue operating licences when the municipality has inadequate infrastructure such as ranking facilities.

This misalignment of functions or lack of proper coordination in the provision of public passenger transport has been a cause for concern for the industry. According to both the PREs and municipalities contacted by the inquiry, there is consensus that integrated transport plans (ITPs) call for complementarity between the different modes of transportation.

However, because the implementation of ITPs is the responsibility of municipalities largely and the licensing function rests with the provincial government, integration is not being adequately realised. This could be partly because of the misalignment of functions or lack of coordination between the implementers of ITPs.

The misalignment is attributed to some municipalities that do not have the capacity to implement the ITP or provide recommendations regarding the issuing of operating licences. Some of the municipalities do not have dedicated personnel to be able to develop ITPs and subsequently provide recommendations to the PRE.

In such a case, the PRE will end up issuing licences without consideration of the ITP which, in most cases, results in routes being overtraded and appropriate infrastructure not being put up by the municipality.

Santaco president Philip Taaibosch affirmed this problem, stating that some of its operators (within member associations) have waited more than five years to be issued with an operating licence, which is not owing to lack of qualifying, but either a disregard for the taxi industry, or dysfunctional management and administration.

He pointed out that operating licence validity periods in Gauteng and the Western Cape (both five years) differ from those in the other provinces (seven years).

Further, Taaibosch said this maladministration adds to the taxi industry’s frustration with e-hailing companies entering the market, because they are not subject to the same rules. E-hailing taxis can legally operate, without operating licences, thereby avoiding submitting paperwork, or have applications on a waiting list for years.

Additionally, operating licences for traditional metered taxis specifically, are largely subjected to area radius within a local municipality, whereas e-hailing services do not operate on fixed routes and are permitted to overlap into adjacent municipalities, which further obstructs a fair playing field.

In terms of subsidies, business arm of Santaco Taxichoice’s GM, Thulani Qwabe, told the inquiry that Santaco is not seeking government subsidies for the sake of the industry, but rather for its commuters, since they are “the poorest of the poor”.

He further questioned how the taxi industry is supposed to compete with other players in the passenger transport market that are subsidised such as metro buses or the Gautrain?

“The lack of subsidies for minibus taxis affect their ability to compete effectively with other modes of public transport. For minibus taxis to be competitive, the industry sacrifices some services such as maintenance and insurance, if the minibus taxi has been fully paid up. In turn, this impacts on the safety of commuters, as well as general quality of travel,” other parties said in their submissions to the inquiry.

An independent public transport expert Paul Browning speculated that the taxi industry is not subsidised owing to its informal nature; there is no formal accounting system to prove, or keep track of, payments that are made by commuters or operators in any stage of operation.

Therefore, it calls for a flexible legislation to consider the taxi industry’s background, commuter demographics and operating context.

Qwabe said the solution lies in political will and proper consultation between government and industry, which, on paper (the National Transport White Paper of 1996) should exist, but in reality does not.

Moreover, the introduction of the bus rapid transit (BRT) systems in some municipalities have presented a number of challenges for taxi operators. Municipalities were required, from 2007, to implement BRT systems as part of their ITPs, which would, ultimately, lead to the integration of different modes of public transport.

Stakeholders have indicated to the commission that the main problem with the implementation of BRT system is that it prevents taxi operators who do not wish to be part of the BRT operating company from competing with the BRT system as PREs are refusing to renew or grant operating licences to operators intending to operate on routes covered by the BRT.