Battle of the taxis heats up
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Hey there, time traveller!
This article was published 22/01/2009 (5003 days ago), so information in it may no longer be current.
The lawyer for Duffy’s Taxi and Unicity Taxi tried to persuade the Manitoba Taxicab Board on Wednesday that his clients’ motives in applying for any and all new taxi licences was completely virtuous.
After opposing close to two dozen other applications for about 800 new licences, Duffy’s and Unicity have now applied for 42 per cent and 58 per cent of all new licences — if the Taxicab Board decides to issue any.
Sid Soronow, lawyer for Duffy’s and Unicity, told a board hearing on Wednesday, "This application is not driven to maintain market dominance."
It was an eyebrow-raising moment for many people in the room, who believe that is exactly and entirely the reason they are applying for the licences, since they have been so relentless in their opposition to the other applications.
In due course, Mike Akinola, an outspoken veteran Winnipeg cabbie — who operates as an independent and who has applied for 50 new licences in the hopes of starting up an aggressive, service-oriented operation called Rapid Taxi — said what many believe to be the case: "This is an act of desperation. They just want to maintain the status quo."
If it wasn’t desperate, it was definitely unusual and begged for an explanation.
Soronow was up for the task and did not back away from the obviously contradictory nature of the application.
A flurry of new applications that started last spring prompted the board to commission an independent study of the industry to determine whether more cabs were required. (Calgary, for instance, has twice as many cabs per capita as Winnipeg does.)
The report has not yet been made public, but the board has made it clear it will be a crucial tool in deciding on the new applications.
"We take the position that demand does not warrant new licences," Soronow said. "But if the study finds something else, so be it. If the board is faced with issuing new licences and is interested in having them productively utilized, then the only logical conclusion is that Duffy’s and Unicity would be the most appropriate to do that."
As the largest companies in town, they probably do have the infrastructure to most easily handle additional cars.
But the lawyer for Spring Taxi, the third-largest Winnipeg taxi company, said in the interest of encouraging competition, other players should be allowed to be competitive if the number of taxis is increased.
Outside the hearing room Wednesday, Duffy’s and Unicity licence owners did not mince words about the new applicants.
"They are just trying to get something for free," said one Duffy’s owner who has eight cars, has been in the business for 30 years and works seven days a week. "If the licences cost $200,000, no one would be applying for them."
That is the subtext of the proceedings. New data on transfer values of licences — those sold on the secondary market — were released on Wednesday. It’s not known how many licences were bought and sold in 2008, but the average price paid was $223,174, up 20.3 per cent over 2007’s average, which was a 44 per cent increase over 2006.
Clearly, there is a lot of money at stake for existing licence holders who would, understandably, be worried about the value of their asset being diluted by a glut of new cars. Then again, like any equity investment, there is no guarantee value will be preserved.
If and when the board issues new licences, they would cost little more than the $200 annual fee. Since 2000, the policy on new licences is that they are not transferable; that is, they cannot be sold on the secondary market.
The board has the right to impose terms and conditions on any new licences it issues, but it remains to be seen if any new licences would be transferable.
It looks increasingly as though the board is being backed into some kind of compromise that might include increasing the number of temporary licences and the time frame in which they are allowed to operate.
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.