KOTI - Korea Transport institute

The taxi industry is facing complex conflicts due to the expansion of platform-based mobility services, changes in government regulations, and the nationwide expansion of the taxi wage system. Therefore, it is essential to analyze the changes in the taxi industry and propose policy alternatives to mediate conflicts among stakeholders. The major issues include conflicts between corporate taxis and individual taxis, as well as conflicts between the traditional taxi industry and platform-based transportation service providers. Taxi usage rates have been steadily declining, with the number of taxi drivers decreasing by 18.3% compared to 2012, and corporate taxi drivers dropping by 42.8%. This situation calls for measures to ensure stable taxi services and address the structural issues within the industry.

  Currently, the taxi industry is classified into general taxi businesses and individual taxi businesses under the Passenger Transport Service Act, with approximately 240,000 taxi licenses nationwide as of 2023. However, declining profitability, driver shortages, and intensified competition with platform-based transport services necessitate legal and institutional reforms. The platform-based transportation service sector is divided into platform transportation businesses, platform franchise businesses, and platform brokerage businesses. As of 2024, there are four companies operating Type 1 platform transportation businesses. These services are reshaping the existing taxi market, requiring new regulations and support policies to address the emerging challenges. 

  International case studies show that New York provided government subsidies to mitigate the drop in taxi license prices, while European countries introduced a separate licensing system for platform-based transportation businesses to ensure fair competition. Japan maintained a corporate taxi-oriented operation while allowing platform-based ride-hailing services to integrate into the market. In Korea, policies such as taxi reduction programs and relaxed call fee regulations have been implemented, but their effectiveness remains limited. 

  To resolve conflicts in the taxi industry, it is necessary to establish a fair competitive environment by applying consistent regulations to both traditional taxi businesses and platform-based services. Additionally, improvements to fare and rate structures should be considered, enabling traditional taxis to adopt dynamic pricing models. Policies for gradually reducing corporate taxis should include compensation plans for affected stakeholders, while measures to activate the trading of individual taxi licenses can help regulate supply more effectively. 

  The gradual introduction of a wage system for corporate taxi drivers should be supported with policies that minimize financial burdens on businesses. At the same time, legal protection should be extended to platform-based taxi drivers, ensuring their labor rights. The government should also foster cooperation between platform operators and traditional taxi businesses by developing public-private partnership models that enhance taxi service quality. Pilot programs for public-sector platform taxis could help guide industry-wide transformations.

  To effectively manage conflicts between the taxi industry and platform-based transport businesses, a governance framework should be established, leveraging regulatory sandbox programs to conduct experimental projects and improve existing regulations. These efforts are essential to ensure the sustainable development of the taxi industry while fostering a harmonious integration of new mobility services through comprehensive policy solutions.