"Taxi Operators Bankrupt Last Year at a 10-Year High"
Industry Recovery Fails Despite Endemic Transition
[Asia Economy Reporter Jeon Jinyoung] Statistics have shown that the number of taxi operators who went bankrupt last year in Japan due to the impact of COVID-19 reached the highest level in 10 years. Since the taxi industry is often called a "mirror reflecting the economy," the situation is drawing serious attention within Japan. Amid a shortage of drivers caused by COVID-19, the industry is facing recruitment difficulties, and with fare increases, even customer visits have dwindled, showing a trend similar to that in Korea.
According to the Japan Nationwide Hire Taxi Association on the 8th, the operating revenue of member companies in December last year decreased by 18% compared to 2019, before the COVID-19 outbreak. The number of taxi business bankruptcies with debts exceeding 10 million yen (approximately 95.8 million KRW) doubled from the previous year to 29 cases last year, 90% of which were small and medium-sized taxi companies with fewer than 50 employees.
Japanese media expressed concerns that the labor shortage continues as many drivers have left the taxi industry due to COVID-19. During the pandemic, with restaurants closing or shortening business hours, the demand for late-night taxis, a peak time for the industry, disappeared, causing the industry to suffer and leading many to change professions.
According to Japan's Ministry of Land, Infrastructure, Transport and Tourism, the number of corporate taxi operators nationwide in 2020, during the pandemic, decreased by 152 from the previous year to 5,828, and the number of corporate taxi vehicles also dropped by 4,533 to 177,367 during the same period.
In a survey by the Taxi Association, the number of corporate taxi drivers nationwide in 2021 decreased by 6.8% from the previous year to 241,727. A representative from a Tokyo taxi company said, "In April 2020, we completely suspended operations for about half a month. More than 10% of employees resigned."
As a result, despite taxi demand recovering recently with the endemic phase, Japan is currently experiencing a situation where supply cannot meet demand due to a shortage of drivers. A representative from a Tokyo taxi company told Tokyo Shoko Research (TSR), a Japanese research firm, "Due to the driver shortage, about 10% of the total taxis are not operating even now," adding, "On rainy weekday mornings, we cannot respond to customer reservations and miss about 30% of calls."
Furthermore, the recent issue of taxi fare increases in Japan is also hindering the industry. In Tokyo's 23 wards, taxi fares were raised in October last year for the first time in 15 years. The base fare increased from 420 yen to 500 yen, and voices from the industry say that customer visits have not continued since then. Other regions, such as Kagawa Prefecture, have also announced taxi fare increases starting in March, indicating that the trend of fare hikes is expected to continue within Japan for the time being.
TSR added, "Currently, the only thing the taxi industry can somewhat rely on is foreign tourists visiting Japan," noting, "There are many long-distance users from airports to accommodations, and foreigners from Europe and other regions often use taxis because they think the fares in Japan are cheap."
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