The taxi industry is now at a turning point. The Ministry of Land, Infrastructure, Transport and Tourism (MLIT) is relaxing the regulations on taxi services to encourage taxi drivers to continue their businesses and welcome new businesses in areas where few people use public transportation and where it will be difficult to maintain the services in the future. Taxi companies have been traditionally required to have at least five taxis when they establish and open a business office, but this situation is changing. Now companies are allowed to continue to operate the business offices even with four or fewer taxis. Furthermore, the requirement for private taxis to operate transport businesses in areas where the population is 300,000 or more is going to be eased, allowing them to do business in low-population areas as well.

Traditionally, the basic policy of the governmental administration on taxi services was “reinforcement of regulations.” After the relaxation of regulations in 2002, the taxi industry started to be oversupplied. In order to address such issues, the Act on Special Measures Concerning Regulation of Taxi Services was enacted in 2009. Taxi business operators were required to formulate a plan to optimize their operations, permission rather than just notification is necessary to increase the number of vehicles, and the requirements for new businesses to enter the market became stricter. As a result, the number of taxi-driving business operators dropped from 7,106 at the end of the fiscal year 2008, the year before the enforcement of the law, to 5,980 at the end of FY2019. Also, the number of passengers dropped from 2,025 million to 1,268 million over the same period. Moreover, in the midst of all of these, the COVID-19 pandemic started.

In the first year of the coronavirus pandemic, FY2020, the number of taxi passengers decreased by 40% from the previous year. The MLIT took a “special measure to allow cars to be temporarily out of service” to reduce the costs of upkeep of the vehicles that are temporarily not used due to the pandemic, which resulted in temporary suspension of more than 10,000 vehicles. The deadline for those taxis that have been temporarily unused to get back to service is currently set to the end of March 2024. However, the industry requests the government to extend the deadline because of delays in plans to procure vehicles and a shortage of drivers. An increase in the number of people leaving their jobs due to the pandemic, the aging of the labor force, and “the 2024 problem” have been also accelerating the downturn in the taxi industry. The last one has been gaining considerable attention from various stakeholders as “the year 2024 problem in the logistics industry,” which forcibly sets the maximum overtime work hours for drivers, and the same applies to the taxi industry.

Restrictions on working overtime result in a decrease in operating hours per driver. Of course, this standard should be welcomed as it guarantees the health of the drivers and the safety of the passengers. However, if the increase of the costs cannot be balanced by the increased fares to be paid by customers, the impact on not only the businesses but also the drivers whose income is commission-based is not small. As the coronavirus pandemic began to be settled, supply and demand for taxis in urban areas and sightseeing areas are becoming increasingly tight. If the labor shortage continues, the situation of people having difficulty in finding a vacant taxi will become inevitably worse. On the other hand, the decline in demand for taxis in rural areas is structural. Detailed measures that meet the demand in each region are necessary, and especially in rural areas, measures for people with restricted transportation methods must be taken regardless of public and private sectors, and beyond various industries and business categories.

This Week’s Focus, June 16

Takashi Mizukoshi, the President