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Gov't teams up to revive Japan's taxi industry as ride-sharing gains popularity

A taxi-hailing smartphone application that displays the fare before getting into a taxi is tested in Tokyo's Chiyoda Ward on Aug. 17, 2017. (Mainichi)

The taxi industry and the Ministry of Land, Infrastructure, Transport and Tourism are teaming up to revive the taxi industry and adapt to the growing popularity of ride-sharing services around the world.

A two-month trial of a smartphone application that displays fixed taxi fares in advance started in Tokyo's 23 Wards and other locations at the beginning of August. As early as this winter, another experimental service that would allow customers to share a taxi with strangers going the same direction is also set to be launched.

On Aug. 15, I used the application of participating taxi company Nihon Kotsu Co. to calculate the cost of a ride between Kasumigaeki in Tokyo's Chiyoda Ward to the area near Tokyo Skytree in Sumida Ward, and "3,870 yen, 29 minutes" was displayed on my smartphone screen.

The application can be used for fares topping 3,000 yen including the hailing service charge. The cost calculated by the application takes into account factors such as the amount of traffic on the day of use. Because the driver took a faster route than usual, there was a possibility that what I would have paid for a regular taxi could be cheaper than the fixed rate. But, even if you get stuck in heavy traffic, there is a sense of calm that comes from knowing that the maximum price has already been decided ahead of time.

The service provides taxi companies with peace of mind, too. The companies can avoid claims from customers who are unfamiliar with the area that their taxi drivers intentionally took longer routes, and the service also looks promising for promoting taxi travel among foreign tourists as well.

For the taxi share service trial, an ideal scenario for the system would see riders inputting their destination, and then being able to view taxis going in that direction, share the taxi with other riders heading to locations nearby and split the fare with the other riders.

The rapid rollout of these measures comes from the threat the industry faces from ride-sharing services in which people use their personal cars to charge customers for rides, such as that offered by the American car dispatch giant Uber Technologies. In Japan, it is currently illegal in principal to use a private car to provide ride services under the Road Transportation Act, and the taxi industry opposes the implementation of such services because the safety and peace of mind of customers cannot be guaranteed.

However, it has also been pointed out that Japan has not made enough of an effort to adapt to the expected rapid increase of foreign visitors for the 2020 Tokyo Olympic and Paralympic Games. A growth strategy and other issues related to ride-sharing services were even discussed in a meeting linked to the government's "Investing for the Future" Growth Strategy Council. A full repeal of the ban in Japan is not outside the realm of possibility.

"Japanese taxis need to show that they could also offer services like Uber and prepare for a lift on the ride share ban," a source related to the council said.

According to the transport ministry, the number of taxi users dropped by 30 percent between fiscal 2005 and 2015, and sales also dropped by over 20 percent, putting the industry in a difficult situation. In October 2016, the Japan Federation of Hire-Taxi Associations tried offering taxis with fixed fares regardless of the destination along with other services in selected regions. The issues surrounding the taxi industry are attracting attention, including the realization of such incentive plans and ride share services. (By Kazuya Nakajima, Tokyo Business News Department)

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