Tbilisi Taxi Drivers on the Upcoming Regulations
In January 2018, Tbilisi Mayor Kakha Kaladze made the announcement many Tbilisians have long been waiting for: the beginning of the regulation of the taxi market. The first step in the process, of course, is understanding the market. By November, all taxi drivers will be required to register with City Hall by paying a fee of 50 GEL (25 GEL for a hybrid vehicle, free for electric cars), and presenting their driver’s license and personal identification documents. By January 2019, additional regulations will be in place – most importantly, mandatory annual inspections for all vehicles in the city. City Hall is considering other measures for taxis as well, including “the coloring of taxis, introduction of unified standards, and additional security norms,” according to Deputy Mayor Maia Bitadze.
Currently, the industry has no regulation, and the city’s streets are crowded with taxis idling on sidewalks or circling residential blocks, belching exhaust and congesting traffic flows. Driving also offers a source of income with very low barriers to entry for people who struggle to find formal, consistent employment.
On a sunny May morning, I hit the streets and spoke with 10 taxi drivers in the Technical University area to see what they thought about the policy change. All 10 had heard about the regulations, but only four knew when and how to register. Registration will be open from August 1 – November 1, after which non-registered drivers will be fined. Most drivers told me they did plan on registering, although two said they were not sure if they would register. It appears that most drivers take the regulations seriously and expect them to be enforced. One driver told me “Of course I will register. If I don’t, I will become unemployed.” When asked how the new regulations are likely to affect the taxi business, most drivers hadn’t given it much thought. One driver said, unconcerned, “I’ve worked up until the regulations, I will work after.”
I came upon two drivers sitting in their cars who were discussing the regulations as I walked up. They invited me into the shade and we chatted about the regulations. Davit is a strong proponent of the new regulations, saying, “It’ll be a very good thing. There will be fewer drivers here, and that is good because if you are from a village, and come here to drive, your potatoes will spoil!” Jokes aside, there is real resentment towards economic migrants on the part of local Tbilisi drivers. Many hope the regulations will cut down the competition. Davit’s friend Merab was less enthusiastic about the new rules. He drives an older car, and perhaps was worried about passing inspection. He did say, though, that passenger safety is important: “Some of these cars, you’re driving down the road and the door just flies open! It’s not safe.” Davit also told me that yes, compliance may be difficult, but recognizes it as necessary.
Over the last 10 years, taxi companies have increasingly swallowed up independent drivers. In 2010, Tabula magazine reported that over 80% of drivers were independent. While we do not know exact numbers, today, some drivers estimate that 1 in 3 taxis work for a company. Apps like Taxify and Yandex Taxi also allow drivers to simultaneously work independently and with the support of a company, with however much flexibility they desire. One driver I spoke with said it is easy for new drivers to find a job driving with a company, but that company drivers keep very little of their fares.
The Tbilisi taxi industry represents a significant market failure. Drivers flood the system, not limited by car quality, safety, or comfort due to the lack of regulation. One driver complained, saying most of the trips he takes in a given day are for 2-3 GEL, but he drives so much that by the end of a year, the only part that doesn’t need to be repaired is the steering wheel. Perhaps a slight exaggeration, it is true that due to the high supply of taxis, prices are extremely low. According to economic theory, the low prices should force drivers out of the market who are unable to make a profit or maintain their vehicles, lowering supply and thus raising prices, but there are other factors at play in the real world. Many of the drivers come from villages outside Tbilisi where there are even fewer options for employment. If one driver fails to stay afloat in the industry and returns to his village, a new hopeful is likely to take his place within the day. Additionally, many drive taxis only part time, using their personal vehicle to make a little pocket change in their spare time, particularly at night or on the weekends. Costs of living are also quite low, especially for young unmarried men living with their parents – no rent to pay, no groceries to buy, no children to support. If the regulations work as designed, the barriers to entry will lower taxi supply, increase prices, and lower demand on taxis, moving closer to market equilibrium and passengers will be more likely to opt for public transportation. While the new designated bus and marshrutka (minibus) lanes do make above-ground transport a bit faster, Tbilisi’s public transportation infrastructure must continue to be upgraded, adding more new, low-emission buses and proportionally eliminating or limiting the marshrutka system. If the new taxi regulations are too successful, we could see even more overcrowding of public transport that is both uncomfortable and dangerous.
By Samantha Guthrie