Elimination of the supply-demand adjustment regulation in the taxi industry
On December 5, 1996, the Ministry of Transport issued a report on the disposition of the supply-demand adjustment regulation in future transport administration. That report announced the elimination of the regulation in all transportation business areas under its jurisdiction. In the revision of the Deregulation Action Program Plan approved by the Cabinet on March 28, 1997, the government adopted a more transparent and flexible supply-demand adjustment for taxis, in which licenses are issued to the standard number of vehicles (calculated from the actual number of taxis in the preceding five years) multiplied by a fixed factor (10% for FY1997, to be increased in the following fiscal year and onwards). While the adjustment regulation is being phased out, the government also committed itself to establish measures to ensure safety and consumer protection, while making due legislative modifications such that the supply-demand adjustment regulation can be totally abolished by FY2001 at the latest, earlier if possible. The government subsequently asked the Road Transport Subcommittee of the Council for Transport Policy to compile a set of recommendations for the design of a specific system to replace supply-demand regulation. The subcommittee commenced studies and made the final report in early April 1999.
Expansion and integration of operation territories
The operation territory is the geographical area in which taxis are allowed to operate. Taxi licenses are issued by territory, which also serves as the geographical unit for the supply-demand adjustment regulation. Each taxi may provide transportation services within its licensed territory, or services either starting or ending in the licensed territory. Operation territories were originally defined to keep taxis operating within the vicinity of the company they belong to, which ensures that taxis are adequately managed and maintained, and that drivers have a deep knowledge of the areas they service. However, pressure has mounted to expand and integrate operation territories because (1) the development and expansion of urban areas have extended the average distance of each taxi trip, thus increasing the number of transportation services outside licensed territories, and (2) the present boundaries make it difficult to respond to fluctuations in demands. For example, larger operation territories would facilitate coping with high demand occurring in certain areas at certain times. As a result, the Deregulation Action Program, approved by the Cabinet in March 1997, stipulated that taxi operation territories would be integrated / expanded starting FY 1997, to halve the current number of territories of 1,911, corresponding in principle to municipal boundaries, within 3 years.