Sounding the Horn for Berlin's Taxi Guild: A Celebratory Meltdown?
- 🚕 🎂*
Taxi Industry Union Commemorates Anniversary - While Implementing Emergency Brake Action - Innovation in taxi services marks its anniversary, restrained by the application of the hand brake
The Berlin taxi sector is teetering on the edge, according to Leszek Nadolski, the guild's first chairman, who is steering the guild through its 125th birthday celebrations this Friday. "The demand is flat," Nadolski laments. Drivers are forced to pick up work from intermediary platforms like Uber and others to make ends meet, even with the introduction of a fixed-price option for taxi rides a year ago.
Surprisingly, Nadolski finds solace in the fixed-price option. The option shows passengers a guaranteed price upon booking a taxi. The price fluctuates within a tariff corridor determined by the length of the ride, eliminating the anxious gaze swinging back and forth between taximeter and wallet. "Customers love this price certainty," affirms Nadolski. Even Freenow, a taxi intermediary, reported a positive balance after a year of fixed pricing in Berlin.
Yet, the peace in the taxi market remains elusive. The ongoing competition with rental car platforms such as Uber and Bolt continues to wear down the industry. The focal point of contention? Minimum prices. Taxi companies are barred from offering their rides below a certain price level, whereas rental cars can adjust their fares dynamically as per demand.
Leaving passengers curbside while returning to the company headquarters after every trip is the norm for rental car drivers. However, they're prohibited from picking up passengers en route. In the eyes of the taxi industry, rental car drivers gain an unfair edge due to their lower prices. The goal is to introduce minimum prices for rental car platforms, a move that Nadolski hopes will level the playing field for the better service provider.
The Senate is currently mulling over minimum prices for rental cars. The examination isn't complete yet, with no details on the progress provided. The city of Leipzig, however, introduced minimum fares for rental cars in 2021, leading to a lawsuit. The court ruled that minimum prices are permissible, but Leipzig had set them too high. Similar lawsuits can be expected should Berlin implement minimum prices.
The taxi industry seems to be steering politics towards a course correction. The Senate has lately taken a harder stance against unauthorized companies operating on platforms without a permit. The State Office for Citizens and Ordnungsangelegenheiten (Labo) inspected the entire rental car fleet on platforms like Uber, Freenow, and Bolt last year, de-registering hundreds of cars.
The platforms found the step necessary, but some criticize the lab's approval process. The application process is taking too long, with insufficient consultations for rental car providers. Moreover, new rejection grounds keep cropping up, which are often hard to understand. There are signs that many rental car companies are shifting their fleets to small towns surrounding Berlin. Local authorities there are struggling to handle the influx of new vehicles, while the lab is no longer responsible, according to Nadolski from the taxi guild. The Brandenburg county council fears the emergence of a "shadow economy in the car rental industry." Scheduled discussions between Berlin and representatives of the counties will take place at the end of June.
By the Numbers:
- Rental car minimum prices in Berlin can range from USD 50–68 per day, depending on the vehicle type, rental duration, and provider.
- There are 165 rental offices near Berlin, with 17 major providers at the airport, including international names like ALAMO, ENTERPRISE, EUROPCAR, HERTZ, SIXT, and THRIFTY.
- Competition among these providers typically helps keep minimum prices relatively low.
Potential Impact on the Taxi Industry:
- Price Wars: With rental car minimums undercutting average daily taxi fares for comprehensive needs, some customers may opt for rentals for multi-day stays.
- Flexibility and Ease: Rental cars offer tourists and business travelers the freedom to visit multiple locations on their schedule, potentially diminishing the need for taxis for specific journeys.
- Market Segment Clash: Taxi services remain vital for short, convenient, or immediate trips within the city center. However, rental cars may gain ground in the market for customers requiring mobility over multiple days.
- Tourist Behavior: The affordability of renting cars encourages visitors to explore Berlin independently, which may affect taxi use for day trips or regional travel, but may not necessarily hurt intra-city rides.
In a Nutshell:
Rental cars remain a budget-friendly option for visitors requiring multi-day mobility, posing a potential challenge to the taxi industry in certain market segments, particularly for extended stays or regional exploration. However, taxis continue to maintain their importance for short, convenient, or immediate city center trips.
- The Berlin taxi industry, under the leadership of Leszek Nadolski, is grappling with a flat demand, forcing drivers to supplement their income through intermediary platforms like Uber and others.
- Despite the ongoing competition, the introduction of a fixed-price option for taxi rides has been met positively by both the taxi industry and intermediaries, providing customers with price certainty.
- The Senate in Berlin is considering introducing minimum prices for rental car platforms, a move that the taxi industry hopes will level the playing field by eliminating the advantage of lower prices enjoyed by rental car drivers.
- The potential implementation of minimum prices may lead to legal challenges, as seen in the lawsuit following Leipzig's introduction of minimum fares for rental cars in 2021.
