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Taxi market liberalisation set to alter fares and services in July

Finland has decided to deregulate its taxi industry, almost three decades after neighbouring Sweden took the same step. What kind of changes can customers and the industry expect after July 1?

Whim-mobiilisovellus älypuhelimen näytöllä, taustalla kaupunkipyöriä.
The Whim app offers a common platform for renting a city bike, purchasing a ticket on public transport, renting a car or ordering a cab. Image: Jaani Lampinen / Yle

Beginning July 1, Finland's heavily regulated taxi market will be liberalized and the market will be opened up to competition. Fares and pricing criteria will change, along with the procedure for ordering a cab and obtaining a taxi license. Former regulations on maximum fares, cars and drivers will become a thing of the past.

Finland's Ministry for Transport and Communications is revamping many facets of its transport services with a legislative reform it says will create new service models and ease market access.

In the case of the taxi industry, this means a broader fleet of different kinds of taxi services and drivers. Those who wish to receive a license to operate a taxi, for example, will no longer have to attend a compulsory course, as new drivers will be subject to only a driving test in order to qualify.

More freedom of choice, more responsibility

The new customer-oriented system will also transfer the onus for ordering taxis and being aware of the new selection of pricing policies and fares to the consumer. Authorities expect 90 percent of future taxi orders in Finland to take place via a variety of mobile phone apps, which means the notorious early-morning taxi queues in downtown Helsinki may soon become a relic.

Transport Ministry service department head Olli-Pekka Rantala says customers will have many more choices moving forward.

"Until now, Finland's taxi system was highly regulated. There was a maximum tariff, which became the running price in practice. Prices will be much more flexible. The increased competition could make prices much lower for consumers, as their freedom of choice will improve," Rantala says.

Dispatch centres will continue operations

How will people be able to call a cab after the reform? Will there still be a central service people can call or will the process be transferred to smart phones entirely?

"Both options will be available. There will still be dispatch centres people can call into to, and from which customers can inquire about the price while ordering a cab. People ordering taxis with an app will likely pay a set fee to the service, which is normally paid in advance. Service providers are responsible for clearly telling their clients about the individual fare and the pricing criteria before the trip takes place."

How will Finland's consumers learn about all the new service providers and fares that are available?

"Just like with any other area of business, the new taxi firms and dispatch centres will market and promote their services. It is in their best interests that the customers learn about them. Dispatch centres will have a clear price list, but it may not include all of the new transport services that are available."

No more taximeters

Is there a chance that prices will go up because of the free market competition?

"There will be more flexibility when it comes to fares. Companies will be free to charge different prices for different times of the day: for example, when things are quiet. Prices will be affected when the threshold to join the market is lowered and the number of taxis available rises – as, for example, the number of part-time taxi operators that work only during rush hours increases."

The reform will do away with taximeters in the cabs. How will customers be able to negotiate the fare with the drivers? Will an oral agreement be binding or does everything have to be in writing?

"All fares and pricing criteria should be clearly explained to the customer before the trip begins. If there is an around-the-clock set price, the taxi should have a sticker or screen with this information on clear display. The Finnish Traffic Safety Authority Trafi has determined that if the trip will cost more than 100 euros, the fare must be negotiated before the trip begins. No one should be surprised by a large fare once they reach their destination."

Losing the stigma of being too expensive

Rantala says that one of the reasons his ministry has wanted to open up the taxi market in Finland is to move beyond the notion that taxis are too expensive and only an option for the country's well-to-do. He says that the average household in Finland only spends 60 euros a year on taxi services, as most Finns avoid calling a cab if they can.

The taxi industry reform seeks to integrate taxi services better into Finnish society's transport options. Customers will in future be offered package services where city bikes, public transport, car rental and taxis are each available as options when searching for transportation, for example.

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