Taxi Drivers Face Uncertain Future With July Deregulation

Will increased competition mean good or bad news for traditional Finnish taxis? Reforms go into gear on Sunday.

File picture of taxis on Helsinki street / Credit: iStock

Taxi drivers in Finland say they’re facing an uncertain future when deregulation hits the industry on Sunday 1st July.

A new transport act includes provisions for buses, taxis and transportation of goods; as well as the rail, maritime and aviation sectors. The idea, say Transport Ministry experts, is to enable seamless transport chains across the country to make networks more efficient and able to compete in an increasingly digital economy.

The taxi industry is facing some of the biggest reforms.

“Our existing taxi legislation is outdated” explains Olli-Pekka Rantala, Director General of Services Department at the Ministry of Transport and Communications.

“We currently have a lot of regulations. The number of licenses is restricted at the moment, and we also have price regulations and so on. From 1st July onwards we will still have rules on taxis, we have certain qualitative rules, what kind of companies can get taxi licenses, but we will no longer have restrictions on the number of licenses” Rantala says.

But as deregulation opens the taxi industry to greater competition, there are fears that traditional taxi drivers working independently or for one of the big Finnish taxi companies will find it increasingly difficult to make a living.

Taxi Driver Concerns

Anticipating a glut of new taxi services on the market, Helsinki cabbies are concerned about how it might affect their jobs.

“I’ve spoken to a lot of driver and there is a fear that with deregulation coming, Helsinki will be flooded with cars diluting potential earnings, causing tension between drivers. Nobody seems to be worried about Uber though which is interesting considering they are the ones with the potential to undercut us the most” says taxi driver Jussi, who asked that we don’t use his real name because he was not authorised by his employer to speak to the media.

“One of the biggest things I keep hearing over and over again is more from a customer point of view, and I’ve spoken to a lot of them over the last few months! They are worried that the quality of driver will decrease a lot, and that safety will become an issue. None of the customers I spoke to mind paying current prices because they feel that current regulations keep them safe” says Jussi.

Another Helsinki taxi driver explains the confusion about which new companies might enter the Finnish taxi market, and how current drivers can stay licensed.

“We will soon get more players in the taxi game from Russia. In the future it’s about platform and delivery of orders, that’s where the money is. We are just trying to stay alive” says Torsti Luotonen, who has been driving a taxi in Helsinki for close to 20 years.

“I asked from Trafi about how, where and when I can get my license and how much it’s going to cost, and they didn’t know. The 1st of July is Sunday and they have no idea how much a taxi license is going to cost” he says.

The Ministry of Transport concedes that it’s not yet possible to apply for new licenses, as authority for issuing them shifts over from local officials to Trafi’s national offices.

“Any companies that fulfill the legislative criteria, they can get a taxi license and in most cases competition brings benefits for customers, and we welcome competition” says the Ministry of Transport’s Olli-Pekka Rantala.

File picture of Fixutaxi app / Credit: Cabonline Finland

Taxi Companies Gearing Up For Change

In anticipation of deregulation and more competition, Finnish taxi companies have been getting their business in gear.

Last year, Swedish company Cabonline bought out two Finnish companies Kovanen and Mankkaan Taksi. Since then they’ve been working on an Uber-like app for phones called FixuTaxi, where customers can make an advance booking, pay a set price, and track the location of their assigned vehicle.

“The new legislation is good for the industry and consumer as it provides customers with new pricing opportunities and better service” says Cabonline’s Salla Kivinen.

“The number of cars will increase in the city area, meaning that the customer gets much more easier the taxi during peak hours” she adds. The distinctive yellow and white FixuTaxi vehicles have become a fixture on city centre roads since the app’s launch on 1st June.

With competition from Uber clearly driving their new business strategy, FixuTaxi slashes the start-up fee for taxi journeys; offers €10 rides in downtown Helsinki; and has a fixed price of €35 from the city centre to the airport – a genuine incentive compared to metered taxi prices.

Uber Strikes Back

After a year idling with virtually no operations, Uber is also revving its engines to get back into the Finnish market when the new regulations come into force on Sunday.

In other countries Uber has helped boost the gig economy, allowing people to become taxi drivers as their full time job or as a lucrative side job. But in some cities Uber has faced problems and protests over safety, licensing, and labour laws.

“We’ll start operating again in the Helsinki capital region but are of course very interested in the option of expanding our operations in the future. We see that the new law is a positive change, because it recognizes also modern ways of moving such as apps, thus providing better choice for both consumers and entrepreneurs” Uber Finland‘s Outi Sjöman explains.

“The law creates a fair and stable environment, the rules are clear for all stakeholders and those who are willing now have a possibility to become entrepreneurs and offer services […] we see it as one of the most forward looking reforms in Europe” she tells News Now Finland.

When the new transport act comes into force, it will have already learned at least some lessons from the Swedish deregulation experience, especially with regards to consumer protection.

Any cars that offer a taxi service will need to communicate prices clearly to passengers before the journey starts, and if the price would exceed €100 it can be negotiated in advance.

“Of course when you make reform there is always opinions for and against” says the Ministry of Transport’s Olli-Pekka Rantala.

“In our legislative reform the whole focus is the customer, to make services affordable, high quality and easily accessible for customers”.