New law to reduce taxis, end low fares

Kyodo

To address what the government sees as excessive competition in the industry, the Diet enacted a law Wednesday to force taxi operators to reduce their fleets in certain markets and end discount fares.

New entries into the market and fleet expansions by existing operators will be banned. The government will be empowered to issue recommendations or orders to carriers that do not comply.

The government says the measure is intended to improve working conditions for drivers and improve safety, but some operators have expressed opposition to increased regulations, saying they go against the government’s deregulation drive.

Since fleet reductions across the board in the industry could violate the Anti-Monopoly Law, the new law provides for anti-monopoly immunity for fleet cuts based on an industry plan.

The taxi industry was deregulated by the revised Road Traffic Law that took effect in 2002. It led to increases in the number of taxis on the road but most operators did not see sales increase amid a weak economy. Drivers, meanwhile, were forced to live with low wages and extended working hours, raising safety concerns, industry officials say.

In 2009, the government introduced a special measures law to “normalize and invigorate” the taxi industry by restricting new entrants and imposing some other restrictions. Some lawmakers said this law had limited impact.

Under this law, voluntary fleet reductions are laid down in 155 of the country’s 640 taxi business areas.

The latest legislation — a revised version of the special measures law — was proposed by lawmakers from the Liberal Democratic Party, New Komeito and the Democratic Party of Japan. It was passed by a plenary session of the House of Councilors.

The transport minister is authorized to designate urban and other areas the minister sees as marked by intense competition. A council including taxi operators will then formulate plans for mandatory fleet reductions for each operator.

The ministerial designation is valid for three years and extendable if the situation does not improve.

Outside the designated areas, fleet reduction plans may be worked out but they would not be mandatory.

Discount fares, allowed under some conditions now, will also be banned. Those operators who were expanding business through discounts criticized the government for what they say is an anti-deregulation move.