People stand in line at a taxi rank near Seoul Station, Aug. 25. Newsis

Seoul city mulls 20-percent fare increase from year end

By Lee Hyo-jin

In recent months, residents in Seoul and other metropolitan areas have been struggling to catch a taxi home at night mainly due to an imbalance in demand and supply resulting from a severe shortage of drivers.

In a bid to tackle the"cab-catching war," the Seoul Metropolitan Government is reviewing various measures including a fare hike, hoping to get drivers back at the wheel.

But experts gave differing views as to whether the proposed fare hike would encourage drivers to work late shifts.

One of the options being discussed is increasing the window of time during which a 20-percent surcharge is applied to 10 p.m. to 4 a.m., from the current midnight to 4 a.m. period. The city authorities are also considering doubling the surcharge to 40 percent for nighttime peak periods ― between 11 p.m. and 2 a.m. ― which would push up the basic charge to 5,300 won from the current 4,600.

Moreover, the authorities are considering increasing the initial fee for the first two kilometers applied during the daytime, which is currently set at 3,800 won, to as high as 4,800 won.

The city government will gather opinions through a public hearing on Sept. 5 before finalizing its plans, which are likely to be implemented by the end of this year.

Yoo Jeong-whon, a professor of transportation systems engineering at Ajou University, anticipated that the increased fares will have limited effects in solving the chronic imbalance of supply and demand in the taxi industry.

A man catches a taxi in Seoul's Gangnam District, July 19. Newsis

"Privately owned taxi drivers, who account for about 70 percent of the total drivers, prefer to work only during the daytime and not in the evening mostly because they are tired or due to health issues. So a fee hike would have only limited effects in making them available at night," he told The Korea Times, explaining that over half of these drivers are aged 65 and over.

As for contracted taxi drivers, it remains to be seen whether the increased fee would directly lead to more income for them since their wage system is quite complicated, Yoo said.

Rather, he stressed that the transportation authorities should be more open to new service providers in order to solve the chronic imbalance of supply and demand. In Korea, car-sharing services such as Uber have been barred from entering the market due to regulations and protests from the traditional taxi industry.

"These innovative businesses could be a feasible solution in making taxi supply more flexible, especially during peak hours such as commuting hours and nighttime, when demand far outstrips supply."

On the other hand, Kim Pil-soo, a professor of automotive studies at Daelim University, said the local government should push for the fare increase, which would improve profit for drivers and thus attract more people to the industry.

"A big exodus of taxi drivers, which was spurred by the coronavirus pandemic, was foreseeable. The current wage for drivers is way too low compared to other countries like Japan. Some barely earn minimum wage under the current wage system," he said.

Kim also viewed that the government should consider other measures to address the issue, such as implementing a flexible fare system, under which, passengers who demand cab services have to pay extra to secure their ride.

As ridership plummeted during the COVID-19 pandemic, many taxi drivers have abandoned the industry for more profitable sectors such as delivery and retail. According to government data, the number of corporate taxi drivers in Seoul stood at 27,100 in May 2022, down 30 percent from nearly 40,000 in late 2019.