Over the past decade or so, the price of a Hong Kong taxi license has plummeted from an astronomical HK$7 million ($891,740) to less than HK$2 million. This dramatic decline has left taxi license owners struggling with substantial financial losses, with some now calling on the special administrative region government to step in and use taxpayer money to buy back these licenses at a proposed price of HK$5 million each. Such a proposal has sparked intense debate, raising critical questions: Is this the right thing to do? Will this improve the quality of taxi services? And most importantly, will this set a precedent, opening the floodgates for other industries to demand compensation for similar market-driven losses?
The public’s dissatisfaction with taxi services in Hong Kong is evident and growing. In 2023, the Transport Department received 1,006 complaints about poor taxi service — a staggering 75 percent increase compared with the previous year. These complaints included serious issues such as overcharging, refusal of hire, and taking unnecessarily long routes. Out of the total, 340 cases involved drivers charging inflated fares, 389 cases of drivers refusing to pick up passengers or refusing to go to certain destinations, and 277 cases of drivers deliberately taking longer routes to inflate fares. Overcharging complaints alone rose 1.2 times annually, reflecting widespread frustration.
This dissatisfaction is not just statistical; it’s personal. Last year, a video of a Chinese-mainland influencer struggling to hail a taxi in Lan Kwai Fong went viral on the short-form video platform Douyin. The influencer reported being quoted HK$200 for a short ride to Causeway Bay — a trip that should cost around HK$60 by meter. Similarly, I recall my own experience of trying to get home from Lan Kwai Fong at 2 am. All the taxis I approached quoted me at least HK$800 for a ride to Tsuen Wan, four times the normal fare. Such stories have only reinforced the negative perception of the taxi industry, with “black taxis” becoming a symbol of malpractice and exploitation.
Taxi drivers have undeniably faced financial challenges in recent years, but these struggles are due to a combination of factors. Rising fuel costs have significantly eaten into profits, while competition from ride-hailing services has offered passengers a more reliable and transparent alternative. Negative perceptions of the taxi industry — stemming from overcharging, refusal of hire, and poor driver behavior — have further eroded public trust and patronage. Additionally, the postpandemic recovery has been slower than expected. Many commuters now work from home, reducing the demand for taxis, while others spend weekends across the border on the mainland, further impacting taxi usage. The financial difficulties of taxi drivers are real, but they are not solely the result of competition from ride-hailing services. Instead, they reflect a combination of external pressures and the industry’s failure to address long-standing issues.
The rise of ride-hailing platforms is not the root cause of the taxi industry’s problems. Passengers simply want a basic, reasonable point-to-point transportation service. They simply expect fares to be charged by the meter, not inflated to extortionate levels. Passengers simply don’t want to see drivers trying to answer multiple phone calls during their rides. Passengers simply expect drivers to know the roads, take the most efficient routes, and maintain professional, courteous behavior. These are humble expectations. It’s not too much to ask.
Unfortunately, the taxi industry has consistently failed to meet these basic expectations. Complaints about poor service have driven passengers toward alternatives, which offer transparent pricing, efficient routing, and a generally better customer experience. While taxi owners and drivers have blamed ride-hailing platforms for stealing their business, the reality is that passengers chose alternatives because they have had way too many poor experiences with taxis. The industry’s inability to adapt to changing consumer needs has been its downfall.
Are taxis all bad? Can ride-hailing platforms serve 100 percent of the Hong Kong market? The simple answer is no. Hence, the coexistence of taxis and ride-hailing platforms is not only possible but necessary for city’s transportation ecosystem to thrive. Uber’s global head of public policy, Andrew Byrne, has pointed to successful examples from other jurisdictions, such as Australia, where a levy on both taxi and ride-hailing services was introduced to support taxi drivers during the transition to a more competitive market. Under this policy, every ride — whether by taxi or ride-hailing service providers — includes a small fee, which is collected by the government and allocated to a fund to help taxi drivers facing financial hardships.
Hong Kong must focus on building a modern, fair, and efficient transportation ecosystem. By fostering collaboration between taxis and ride-hailing platforms, implementing thoughtful regulations, and prioritizing the needs of commuters, the city can create a transportation system that benefits everyone, without compromising its fiscal responsibility or global reputation
A similar arrangement could work in Hong Kong, providing a safety net for taxi drivers while ensuring fair competition. Byrne has also emphasized the potential for collaboration between taxis and ride-hailing platforms. In fact, thousands of taxi drivers already use Uber’s platform to find passengers efficiently. By integrating taxis and ride-hailing services into a unified platform, Hong Kong could create a seamless transportation network that benefits both drivers and passengers.
However, for this coexistence to succeed, certain principles must be upheld. Quotas limiting the number of ride-hailing drivers should be avoided, as they would reduce service availability and increase wait times for passengers. Licensing fees for ride-hailing drivers should also remain reasonable to encourage participation and prevent unnecessary barriers to entry. Ultimately, the focus should be on fostering healthy competition, improving service quality, and meeting the needs of commuters.
Is the HK$5 million buyback the right thing to do? No, it is not. Taxi licenses were purchased as speculative investments, and market forces have naturally devalued them over time. Using taxpayer money to compensate license holders would unfairly burden the public while rewarding speculative behavior. The government’s responsibility is to serve the broader public interest, not to subsidize private financial losses.
Will this improve the quality of taxi services? Absolutely not. A buyback program would do nothing to address the core issues plaguing the taxi industry, such as overcharging, hire refusals, and poor service. Instead of a bailout, resources should be directed toward initiatives that incentivize better service, such as driver training programs and technology upgrades.
Will this set a precedent, opening the floodgates for other industries? Yes, it will. If the government were to compensate taxi license holders, it would create a dangerous precedent for other industries to demand similar bailouts whenever market conditions shift against them. This undermines market accountability and risks draining public funds that would be better spent on essential services like healthcare, education, and housing.
In conclusion, rather than bailing out taxi license holders, Hong Kong must focus on building a modern, fair, and efficient transportation ecosystem. By fostering collaboration between taxis and ride-hailing platforms, implementing thoughtful regulations, and prioritizing the needs of commuters, the city can create a transportation system that benefits everyone, without compromising its fiscal responsibility or global reputation.
The author is a senior lecturer at the Hang Seng University of Hong Kong, and co-chair of the Advocacy and Policy Research Committee at the Hong Kong Institute of Human Resource Management.
The views do not necessarily reflect those of China Daily.
