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Taxi industry deregulation only a matter of time, says expert – even in Finland

Finland's taxi sector is tightly regulated and new services and operators are strictly limited from entering the field. Even the world-famous lift-sharing service Uber can't operate in Finland without official sanction, as the number of permits is restricted, leaving no room for newcomers. Finland is part of Europe, so it’s only a matter of time before new solutions have to be accepted, says one expert.

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Image: YLE

Using a smartphone app to order a taxi is nothing new for Oulu residents - they've been able to do so since last November. What is new, is that customers can now rank the service they've received. Drivers can also rate the success of the transport themselves.

Oulu taxi entrepreneur Kimmo Suorsa says he gives top rating to at least one customer ride each day.

“If you haven’t had any problems with the customer and everything has gone well, I report that there have been no problems and give the trip five stars,” he says.

However that's as far as innovation in the field may go here in Finland. The sector continues to be strictly regulated and new providers and services find it difficult to break in. At present, for example, the number of taxi permits is maxed out and minimum prices are in effect for all taxi trips across the board.

Last spring, the Finnish Competition and Consumer Authority (FCCA) called for reforms to the taxi code, citing a long list of distortions in the market. The competition watchdog spoke of cartel-like behaviour in the current Finnish practice, citing limited competition and high prices. Market mechanisms are also skewed at present as there is no way of ensuring adequacy of the limited supply of taxis to meet fluctuating demand.

One price to rule them all

The nationwide minimum price practice, for example, is so well established that the average taxi driver doesn’t even understand the concept of potential price wars.

“At the moment, prices are what they are and we make our contributions to the Finnish State. Nothing can compete,” says Suorsa.

Whether breaking apps or new taxi licenses, everything in Finland runs up against the same problem in the taxi industry: overregulation. Game changers like the ride-share app Uber stand no chance of entering the Finnish market without approval from the authorities and the licenses are few and far between.

Marko Forsblom, a specialist in the development of intelligent transport systems, says the situation in Finland could change quickly.  

“Finland is part of Europe and the greater world. I would prefer to see Finland as a forerunner in this matter and not a runner-up. It’s just a matter of time before these kinds of changes come to Finland,” he says.

The Transport Ministry has acknowledged that something needs to be done about the current situation, but it said that so far at least, all attempts at reforming the sector have failed due to a lack of political will.

The Ministry says it has long envisioned making all consumer transport options available in the same package, in much the same manner as telephone operators bundle their services. Consumers would pay a monthly price, which would include, for example, a certain number of kilometres by bus, train, taxi, private cars, and even bicycles.

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