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September 22, 2015

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Home » City specials » Hangzhou

City throws a lifeline to suffering cabbies

By Wu Huxin | September 22, 2015, Tuesday | Print Edition

THE Hangzhou government has come to the aid of the city’s ailing taxi industry by agreeing to abolish the operating license fee, effective October 1.

This action is expected to increase the average cabbie income by 400 yuan (US$62.87) to 1,000 yuan a month — welcome news as traditional taxi drivers battle stiff competition from the new wave of ride-hailing app services like Uber and Didi Kuaidi.

“I work long hours every day and earn about 400 yuan,” said Cao Zhongsheng, an Anhui Province native who has driven a taxi in Hangzhou for 11 years. “But then I have to pay 120 yuan to my company and more than 100 yuan to refuel. That doesn’t leave me much. It’s frustrating. The downturn of the taxi industry is getting worse, and if the government doesn’t act, more cabbies will be out of a job.”

For years, the city government has held auctions for cab licenses that end up costing from 160,000 yuan to 385,000 yuan. Only cabs with such licenses are legally allowed to pick up passengers. However, drivers for tax-hailing app services are usually private citizens using their own cars and are not licensed as cabbies. They operate in the peer-to-peer online realm.

Three year ago, more than 1,000 Hangzhou cabs went on a strike to protest low earnings and high fee charged by city-owned taxi companies. In the end, the government promised to subsidize fuel costs at the rate of one yuan for every ride. Cabbies weren’t happy with the solution.

The new regulation would also allow cabbies to apply for free operating licenses themselves instead of having taxi companies holding the licenses.

Henceforth, local authorities will re-evaluate taxi companies and cabbies every six years. Only those who pass the evaluation will be allowed to continue using the licenses. Otherwise, the licenses will revert to others.

In addition, the government will refund the 100 million yuan in franchise fees already collected this year.

Currently, there are about 9,910 taxis in downtown Hangzhou, driving for 76 taxi companies. About 23,000 cabbies pick up 600,000 passengers a day.

Ride-hailing app companies are contacted by passengers through smartphones. Often the fares are cheaper, and budding camaraderie between certain drivers and frequent passengers sometimes results in fare discounts.

Across China, and indeed across the world, government attempts to outlaw the ride-hailing services have generally failed to halt their rise because they have become so popular with the public.

“I used to earn 5,000 yuan to 6,000 yuan a month,” said traditional cabbie Cao. “But now that’s dropped to 4,000 yuan. The government should crack down on these ride-hailing companies because they are hurting our profit and causing havoc in the market.”

Indeed, more cabbies are leaving the business. By one estimate, more than 400 taxi drivers have already left. Empty cab sit in taxi company lots for lack of drivers.

“Some of my fellow cabbies have quit in recent months despite taxi rental contracts that stipulate 20,000 yuan in penalties for early termination,” said Li Fengzhi, a Henan Province native who has driven cab in Hangzhou for one year.

She said she sees business declining by the day and blames ride-hailing services.

To try to boost economies of scale, the state-owned Hangzhou Bus Group linked up with five local taxi companies in late August to create the Hangzhou Taxi Co.

The new company operates more than 2,000 cabs and cooperates with Internet companies and third-party online payment platforms in an effort to compete more efficiently with ride-hailing services.

Beginning in October, the company is expected to launch its own taxi-calling app. The website will include information on every cab, including cabbies’ personal details, car licenses, odometer readings and fare schedules.

“The ride-hailing industry has problems with ensuring passenger safety and the reputability of drivers,” said Cao.

“In addition, private car owners who drive for these ride-hailing apps aren’t as familiar with city streets as we professional cabbies are.”

The simmer dispute between traditional cabbies and their ride-hailing competitors has boiled over several times in the past year. Sometimes clashes have occurred.

The traditional taxi industry is just now coming to grips with some of its own problems, which have helped propel ride-hailing services to popularity.

“It is nearly impossible to get a taxi during commute rush hours or on weekends in the West Lake Scenic Area,” said Peng Zhen, a Hangzhou native who depends on taxis to get around.

“Sometimes cabbies refuse to take passengers if they want to go to a destination that is either too short or too much of a bother for the driver. The only way the taxi industry will survive is by improving its services.

Hangzhou


 

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