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Tuesday 16.10.2018 | Name days: Daiga, Dinija

Latvian Taxi Company Employers’ Association Head: taxi industry to turn «upside down»

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In two months, Latvia taxi industry is to experience significant changes finally enhancing the market arrangement.

Smile Taxi director Aleksei Ignatjev

The idea was expressed by the Latvian Taxi Company Employers’ Association Head and Smile Taxi director Aleksei Ignatjev, who in an interview for BNN forecasts revolution against fraud and other violations encountered in the taxi industry. Starting from January 1, new regulations come into force – stating that taxi drivers are obliged to provide a passenger with a check presenting also requisites stipulated by the the laws on carriage of passengers in taxi cars. Ignatjev believes the new rules will allow the responsible agencies and the association to tackle fraud in the Latvia taxi industry more successful.

Has the taxi industry started to recover from the crisis? Are there any positive tendencies?

In short – compared to the last year, the situation is comparatively good, considering there is no downturn, as last year the taxi industry, similarly, as the whole Latvian economy, experienced a lasting drop. Currently we are at the point when there is no drop, but there is no growth either. We do not see growth, as currently there are no grounds for that. We will expect improvement along with the new rules coming into force starting from January 1, requiring checks for passengers. I hope all the speculators and companies cheating their clients with the meters not issuing checks will drop out.

Could this introduce serious corrections to the market?

Definitely. The greater the obstacles and higher standards to start a taxi business, the better the business environment. Currently there are no the so called obstacles.

Everyone can take up a taxi business now… with no experience, with nothing. I keep considering 2005 when we had quotas, after we jointed the European Union – all the barriers were abandoned.

Currently there are 60 companies operating in Riga. It is difficult to control them and the principles after which they work are not clear either. Drivers shift companies all the time, without bearing any responsibilities. I am stressing all the time that only eight to ten of them actually understand what taxi business is like. I see no grounds for 60 taxi companies operating in the market.

Did the crisis bring corruption regarding the number of taxi cars? Did the companies reduce their car parks?

Absolutely. Interestingly enough, car parks were mostly reduced by companies operating on the basis of honest principles: those who have liabilities, actual employees etc. While speculators simply selling taxi licenses to drivers were little affected by the crisis, because the licenses trade does not require any responsibilities – if they do not have transport – they have nothing. If there is an opening – it not difficult for them to install the green light to a private car, buy a license for 50 lats and start operating, which gives no benefit neither to Riga, nor its image and budget. This is not good for consumers either, just because the cars and the quality of the service is bad, and it is often the highest tariff is applied. Clients have become clever though, they know there are some companies one cannot rely upon.

What are the approximate market changes regarding taxi car parks?

The fluctuations are quite considerable. When Baltic Taxi entered the market, they rapidly increased their car park. Smile Taxi, Red Cab and other market players, on the other hand, reduced their parks significantly.

The Taxi Association’s car park has remained unchanged. However, the number of taxi cars is not so important, as the crisis has taught us not to make «stocks». Previously taxi companies told to the drivers to operate in the streets, that they would earn something. But currently we are working to optimize the car flow, in order clients would get a car as soon as possible and all the cars operating would work at full capacity. This is possible due to different GPS solutions introduction, which allows to reduce the number of cars and helps to economize. As an example, Smile Taxi had 65 cars, while currently we have about 40-50 cars operating. It cannot be asserted the quality is declining. Similarly with Riga Taxi park – they had 250 cars, then 220, but at the moment – about 120, which is optimization. They are selling their old cars leaving only the new ones, expecting the market recovery, when they will regain their positions. This is optimization.

How many market players there will be left after January 1? How will this affect the competition development?

Actually currently there are about 1 000 cars in Latvia not equipped with meters issuing checks. We will see what happens. There are ongoing fights with the meters suppliers for the prices. We will have to evaluate the offers. The approximate sum for a meter is about 300, 400 up to 600 lats, depending on the technology.

It is very difficult to estimate how many of those speculators will purchase meters.

Consequently the question is – whether they will risk such an investment?

Exactly. Considering if it is an old model of Volga or Opel. Is it worth running risk with such a car? They might simply switch to bigger companies. I hope they will do that, as this is not a small investment after all. What is clear is that consumers will benefit from the changes for sure. The business of the speculators is simple at the basis – sitting all day in a car and waiting for a client. One to two per day appear and are charged the biggest sum possible – 10-15 lats. Such fraud will not be possible any more. They will have a choice of investing those 300 lats in a new meter and operate honestly or not.

But isn’t it possible to «upgrade» the meters, so that they would show what the drivers want?

It is, but there will be checks signalling for each «upgrade».

Will all the clients be righteous to ask for a check?

They are even now, but drivers can issue as a check each piece of paper where they have written something. Consequently if people turn to us presenting an «upgraded» check – it will be easy for us to trace the forgers.

Speaking about the taxi tariffs, they have not changed many years already, do they correspond to the present situation?

I think they do. Considering the tariff ceiling was not high enough previously, currently the crisis has introduced some changes. We cannot consider tariff growth in the period of crisis, as that way we would be harming ourselves.

So taxi tariff changes are not to be awaited in near future?

There are no grounds for them either. Regarding the European countries, the tariffs are three to four times higher, but they have a good reason for that. People are not used to driving taxis in Latvia, they use private cars, without realizing that taxi cars are more economical for them in terms of time saving, unnecessity to deal with technical problems and different costs.

The taxi industry was considering introduction of equal tariffs to all companies in order to limit fraud. There are so many taxi companies that it is very difficult to be aware of each tariff they have. Government officials tried to do something as well regarding this matter, they proposed writing the tariffs on the doors, which did not give any significant effect.

Why?

Tourists are most subject to fraud, therefore we have to take strict decisions, in order to protect them. It is very difficult to cheat Riga and in general Latvia residents, as they have institutions where to complain, possibilities to protect themselves, therefore Old Riga and tourists are the biggest problem. Currently there are no solutions. Maybe something will a appear with time, for example, with certification, in order not everyone could work as a taxi driver, like in Estonia. Estonians have reached high level of professionalism. One has to take an exam, prove his language skills, knowledge of the city etc. to become a taxi driver there. No one can start business out of nothing in Estonia, but one can in Latvia.


Leave a reply

  1. milly says:

    Finally!

  2. @Rita says:

    At least something is done to reduce the fraud.

  3. One says:

    I don’t believe that an obligatory check will turn the tax industry «upside down», most likely, those who have already engaged in fraudulent actions will manage to find ways to bypass this new law as well.

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