Published on 17/12/2015 by Punchmedia

Taxi Revenue to Rise Despite Competition

Revenue in the Taxi and Limousine industry is expected to grow by an annualised 2.0% over the five years through 2015-16 according to a new report from IBISWorld. Mostly made up by the taxi side of the industry, slightly stronger revenue growth is expected in 2015-16, with an increase of 2.3% forecast to take revenue to $5.7 billion.

Taxi Markets

Over the past five years, a sustained period of economic uncertainty has strongly affected consumer behaviour. This has led to attempts to rein in spending on discretionary services like taxis, which can be easily substituted with cheaper but less convenient forms of public transport during times of economic difficulty. In the years since the global financial crisis, other demand factors have also shaped the industry's performance.

Demand

Demand from business travellers has recovered from a low base, as business travel budgets returned to normal levels. This increase has supported overall growth in the industry as businesses represent a significant market for taxi services. Growing tourist numbers have also provided a boost for the industry, as many tourists require taxis to travel while in Australia.

Competition

While industry revenue has increased marginally over the past five years, profitability has steadied due to a shift towards cheaper options offered by price-competitive firms such as Uber. Uber is a ride-sharing service that links customers with private drivers using their own cars.

Industry Profit

In the taxi segment, the ownership of taxi licences and the operation of taxis are frequently separated, which means that multiple players seek a return out of the fare a customer pays. By setting taxi fares, regulators play a substantial role in determining industry margins, especially in periods of rapidly changing fuel prices.

Taxi Regulation

Taxi regulation is a key factor in industry performance. State governments set the number of participants in the taxis and private hire vehicles segments through licences. The structure of the taxi segment is complicated by the role of intermediaries in the industry. Taxi plate owners can subcontract vehicle operation to a driver, either directly or through an intermediary that operates many taxis. The driver pays the plate owner a share of their takings.  

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Curtis is a leading expert in the business-for-sale industry, serving as a senior content creator at anybusiness.com.au.

With a career spanning over fifteen years, Curtis has accumulated extensive knowledge in the domain of business sales, acquisitions, and valuations. His deep understanding of market dynamics and his ability to translate complex industry jargon into accessible insights make him a trusted resource for entrepreneurs and business owners looking to buy or sell businesses.

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