I thank the Chairman for inviting me to attend this meeting, together with Mr. Feeney, to discuss the economic review of the small public service vehicle industry. The Commission for Taxi Regulation engaged Goodbody Economic Consultants to conduct a review of the trends shaping the general environment in which the industry operated and an assessment of the economic impact of the liberalisation of the sector. Copies of the independent review which was published on 9 March have been circulated, together with a presentation of the key findings of the review.
I will briefly outline the scope of the review and the methodology used. The review focused, in particular, on supply and demand issues and industry earnings. As part of this, there was an extensive review of commission publications and statistical information. Extensive face-to-face consultations were undertaken with key stakeholders. Data collection was conducted through a series of surveys, with research into international experience.
One of the key findings of the review is that consumer demand has increased, with a minimum of 100 million trips being taken in 2008, placing an estimated value of €1.5 billion on the industry. The volume of cab trips has increased by 25% since the last economic review was undertaken in 2005. Small public service vehicles, including taxis, hackneys and limousines, are used more than other modes of public transport such as buses and trains. Although there is increased business use, social and recreational trips remain the main reason for using cabs. Nationally, 63% of trips are now arranged by telephone, while 37% are arranged on the street. The majority are taken between Thursday and Saturday, which reflects the predominantly recreational usage. While the review found that people with disabilities continued to have problems accessing services, overall trends show greater use of and confidence in the sector among the general public.
The review found there had been a significant increase in supply since the liberalisation of the market. For example, many second drivers of taxis, known as "cosies", have purchased their own licences. Between 2000 to 2003, significant numbers of hackneys transferred to taxis. There was lower growth in supply in the industry between 2004 and 2008 and a sharp decline in the number of new entrants since mid-2008. The limousine sector is growing, while the hackney service continues to be prominent in non-urban areas. Some 8.7 million work shifts were undertaken by the industry in 2008. Supply peaked between Thursday and Saturday but was less peaked than demand. The exit rate in the industry is not high.
As I mentioned, the report identified a deficiency in supply for people with disabilities, with wheelchair accessible licences accounting for only 6% of the overall fleet. Usage among this sector is low compared with that of the general population. This low usage is probably a function of both availability and affordability issues.
It has been difficult to ascertain precise data on the earnings of full-time drivers because of varying working hours and the fact that data received from drivers and consumers differed in terms of the average fare paid. While drivers stated the average fare was approximately €9, household surveys indicate it is approximately €15. The report found that drivers had to work longer hours to achieve their income targets, with some earning below the average industrial wage. The driving down of incumbent drivers' earnings is a normal effect of competition, but the review found that earnings were not collapsing.
Full-time drivers work, on average, 52 hours a week, with 25% working in excess of 60 hours and 11.2% working more than 70 hours. The part-time service provides a valuable contribution at peak time, with some 54% of part-time drivers offering service at peak times compared with 36% of full-time drivers. Part-time service is necessary as certain parts of the country could be deprived of a service without it. The commission can consider the capability of the taximeter for recording hours worked and drivers' earnings in the future.
As for dispatch operators, more than 400 such operators are registered with the commission nationally, with 40% of cabs affiliated to them. An increased number of business users use them. The figures increased from 50% in 2005 to 60% in 2008 and 90% of businesses are satisfied with the services provided. However, wheelchair users still encounter difficulties in accessing services from dispatch operators. Moreover, the review notes that increased affiliation to such operators could reduce external congestion costs.
In respect of congestion, there are 13,200 cabs versus 470,000 private cars in Dublin. Cabs, therefore, contribute approximately 9% of car kilometres in Dublin, whereas private cars contribute 91%. While cabs contribute to congestion, they also can reduce it during peak times when drivers leave cars at home and use SPSV services.
From an international perspective, New York usually is the entity compared with Ireland. However, it has a restricted market resulting in poor quality service, long waiting times and high levels of dissatisfaction. Therefore, we have used Washington DC which is more similar to Dublin in that there are no quantitative restrictions on entry, raised standards and a similar number of cabs per thousand of population. Other countries also have adopted regulatory models close to the Irish model, including Austria, Netherlands and Japan, and half of the local authorities in the United Kingdom.
As for the regulatory environment, the OECD and the World Bank support the approach to regulation adopted in Ireland with an emphasis on quality regulation combined with entry deregulation. Moreover, the current regulatory structure is supported by the economic review.
In respect of the impact of liberalisation, consumer use continues to grow, which is of benefit to consumers in terms of reduced waiting times and satisfaction with the quality of service provided. However, increased competition is making it difficult for drivers who had enjoyed low levels of competition prior to liberalisation. The market now is highly competitive and drivers work longer hours to achieve income targets. Enforcement activities have indicated low levels of non-compliance.
As for a possible moratorium, the review shows the decision as to what is an appropriate level of cabs should be left to the market. Current exit levels are not high and the rate of entry is in decline and, therefore, is not a reason for a moratorium. Congestion is not a reason for a moratorium, as peak demand at night time demonstrates the SPSV supply contributes to reduced congestion. The review also states the reduction in drivers' income is insufficient to justify a moratorium.
The commission proposes to take a number of next steps which are set out in the presentation before members. They include the consideration of fast-tracking of new vehicle and driver standards for incumbent licence holders. Details of the recommendations were advertised in national newspapers last Monday inviting submissions from all interested parties to give submissions to the Commission for Taxi Regulation by 5 May, after which the commission will evaluate all the submissions received and seek advice from the advisory council before making any further changes or introducing new reforms.
