Transport for NSW (TfNSW) has commissioned Pricewaterhouse Coopers (PwC) to advise it on how many new taxi licences Sydney needs in 2012/13. The industry as a whole is vehemently opposed to any new tender and stated their reasons why at a forum at PwC’s offices on 1 February. Did TfNSW listen? Only time will tell.

by Peer Lindholdt

The Sydney taxi fleet grew by 550 between December 2009 and 2011. In 2009 before the Government began flogging short-term leases by tender the average lease fee for an unrestricted plate was $28,500 p.a.. With the first release of 100 licences it rose to $32,000 and in 2010/11 to $36,000, however in the interim release for 2011/12 the price dropped to $34.500, a sign that the market may have reached its saturation point and buyers have woken up to the fact they have been screwed. This view was reinforced when TfNSW announced in December last year the re-tender of 28 Peak Availability Licences that had been sold earlier but handed back.

This re-tender closed on 3 February so the result will not be known for some months.

During this same period Pricewaterhouse Coopers, which had advised TfNSW on the previous tenders, had been busy preparing for the next one, 2012/13, and stakeholders had been invited to attend a forum on 1 February.

This became the mother of all forums. Normally only the NSW Taxi Council turns up to speak for the industry mafia, but not this time. The network bigwigs were there in force - from CCN, Premier, Legion, Manly and St George Cabs lead by CCN’s Fred Lukabyo and Premier’s Peter Hyer. Royalty indeed.

Also attending were Trevor Bradley and Ernie Moellenhaur from the NSW TDA, Michael Jools from the ATDA and representatives from TfNSW, the Taxi Council, the TWU and the disabled lobby - 30 people in all.

Both the driver representatives and the bigwigs were arguing strongly against any further licence releases, but for completely different reasons.

The ratio of perpetual licenses to government-leased licenses has dropped from 86% in 2009 to 78% in 2011. Duped by the TfNSW’s 10-year guarantee on lease fees saw many operators buy tender plates and hand back their old plate to its owner. The networks who manage the bulk of the perpetual plates and therefore controlled the market price have watched the demand from operators drop away sharply with others falling behind on their network and lease fees. No longer do they guarantee owners their regular monthly cheque unless their plate is leased out and fees paid.

If TfNSW continues to release new licences by tender the size of the bids will drop, dramatically over time, forcing owners to match or beat the lower fees and that will destroy the value of their investment.

That of course would reduce the cost to operators and therefore put downward pressure on fare increases which would be of benefit to drivers and passengers alike as cabs become proportionally more affordable. Isn’t that what the Government wants? Isn’t that what the drivers want?

Well drivers do, but the present saturation of taxis in Sydney is killing their income. This Christmas was the worst since 2008 they report.

Were the TfNSW to release another 100 ‘drivers only ‘ licenses we might see the bidding crash with average bids around $20,000. Wouldn’t that be something? Just think about it.