Taxi services reform brought higher average fares while making cheaper rides available

In large municipalities it is often possible to get a cheaper taxi ride than it was before the taxi services reform of 2018. While the prices of taxi services have increased on average, cheaper fares are also available now. However, consumers need to make greater efforts to find a the most suitable taxi ride for themselves, because there are differences in taxi services as well as great price fluctuation.

The Finnish Competition and Consumer Authority (FCCA) is studying the effects of the taxi services reform. A study that is now coming out examines taxi fares as part of a broader whole, specifically from the point of view of the consumer. When evaluating the effects of the reform it is important to consider how the market would have developed if the reform had not happened. Inflation and rising fuel costs would probably have led to more expensive taxi rides even if the reform had not been enacted.

The FCCA study compares the development of the taxi market in Continental Finland with that in the Åland Islands, where the taxi market remains heavily regulated. The development of the taxi market in Åland can be seen to reflect how the situation in Continental Finland might have developed without the taxi services reform. In the study taxi apps were used to record the fares from 23,000 taxi rides in Continental Finland and 1,200 rides in Åland in 2022.

In the study it was noted that the taxi services reform raised prices offered through the apps for taxi rides rose by an average of about 7% in large municipalities and by about 15% in other areas. However, there was considerable variation both among the different regions and within individual regions.

The taxi services reform has created better preconditions for price competition on the market. In large municipalities consumers can save an average 6 euros on a five-kilometre ride by selecting the cheapest taxi available than if they select a taxi at random. The equivalent saving is about one euro in smaller municipalities.

Not everyone is able to use taxi apps to take advantage of price comparisons. Calling a dispatch centre does not necessarily help because dispatch centres are not always able to estimate the price of a ride in advance.

Solutions are needed for locations with heavy traffic

There are situations in which ordering a taxi by phone or using a taxi app are not feasible. These include busy traffic hubs such as railway stations, airports, and harbours. In locations with busy traffic, it can be difficult for consumers to select the most suitable ride for their purposes. In addition to comparing prices, it is also difficult for a consumer to evaluate safety considerations of a taxi ride, for example.

According to the FCCA, one good way to deal with the challenges of traffic hubs could be for the body responsible for administering a taxi station to put the taxi station out to tender.

Availability of taxis varies from one area to another

In addition to prices, the study examines the current state of taxi availability. In population centres taxis are easily available even during times of peak demand. However, there are problems in availability in smaller communities far away from population centres.