Taxi Federation says reforms weakened consumer confidence

One year ago major changes to the rules for operating a taxi opened the market up to many more drivers.

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File picture of taxis on Helsinki street / Credit: iStock

A year after major reforms to the country’s taxi industry, the Finnish Taxi Federation says customer confidence in all the changes is somewhat low.

In a survey, the Federation measured consumer confidence before and after the liberalisation, which opened up the market to companies like Uber, removed restrictions on the number of licenses that could be issued, and allowed individual drivers to start their own taxi services.

In larger cities supply has outstripped demand so far, while government ministers at the time of the reforms hoped that more competition – and potentially cheaper prices – would uncover a ‘hidden demand’ for taxi services.

“I think people who use taxis very seldom, they are a little bit afraid. They don’t know how the system is working, they are afraid how much it costs and how they can get a taxi” says Timo Koskinen, Managing Director of the Finnish Taxi Federation.

In the initial stage of reform some 24% of people who responded to the survey were very positive or slightly positive about what market liberalisation would bring. However just 12% of people feel the same way now.

“We have this Finnish good quality taxis still, so our drivers and taxi owners they haven’t lost their knowledge and their capacity and their possibilities to have good services” he says.

The Taxi Federation has seen an increase in the number of people applying to become members, as driver start their own taxi businesses, and Koskinen says they’re joining his organisation to find out more about best practice for running their own companies.

“Those new license owners, many of them don’t know yet enough about the taxi business […] they make mistakes, and that is something our customers can see on the roads” he tells News Now Finland.

Are ride share taxis cheaper? 

One concern that was raised about opening up Finland’s taxi market was that app-based taxi services such as Uber would enter the market and drive down prices.

Tomi Koskinen from the Taxi Federation says in practice this hasn’t really happened, in part due to high labour costs.

“When you use this service, is it really cheaper? They have this pricing system when demand is going up, price is going up. It means that sometimes they can be cheaper and sometimes much more expensive” he explains.

Koskinen says it’s “impossible” to have very cheap taxi rates in Finland because drivers have to pay taxes, pension payments and other costs of running a business which in Finland can be rather high.

“The driver still has to earn his salary”.

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