Taxi access to railway stations market study

We carried out a research study to find out whether the permits used by railway station operators to control taxi access to their stations were having a detrimental effect upon either passengers or competition.

We looked at both of the main types of station 'taxis'. The first of these two types are 'hackney carriages' which are available for immediate hire at a rank or through being hailed in the street, and can also be pre-booked. The second type are private hire vehicles, also sometimes known as 'minicabs', which must be pre-booked (often through driver's membership of 'circuits') and cannot use taxi ranks including those at stations, although private hire booking offices are located at railway stations in some cases.

We had previously received a series of complaints from individual drivers, taxi firms, and the GMB Professional Drivers' Branch (GMBPDB). These centred upon the price and availability of individual drivers' permits and tendering for sub-letting rights to concessions.

Our first objective was to assess how passengers were affected by taxis' access to stations. Our second objective was to assess how competition law might apply to these arrangements.
We based our study on desk research and a series of interviews with Network Rail, train operators, taxi firms, and the GMBPDB.

Our findings

We observed that station operators use a number of methods (referred to below as 'station permit fees') to charge taxi drivers for access to stations. Station operators that restrict access to taxis commonly tend to levy fixed annual permit fees. There are many examples of station operators giving access to hackney carriages, private hire circuits, or both.

We found no evidence that station permit fees have an impact on hackney carriage fares, which are usually set by regulation.

Nor did we find any evidence to suggest that station permit fees influence private hire fares, or reasons to believe1 that this would be the case.

We were not made aware of any instances whereby access arrangements had a material negative impact on passenger service, for example waiting times.

It was previously suggested to us that some station permit fees might represent an instance of illegal excessive pricing under Chapter II of the UK's Competition Act (the Act). But we found no reasons to suggest that we should launch an investigation under the Act. None of the station access regimes that we observed appeared to act against passengers' interests. Because of this we decided not to commit resources to opening up an investigation.

Recommendations

We do not presently plan to explore this issue further.

Taxi drivers or circuits considering submitting a complaint to us about railway station access should clearly explain how they think station access arrangements are having an adverse impact on passengers, either directly or by harming competition.

Notes

1 Our research suggested that station permit fees are commonly levied on a fixed basis, in other words as a fee that drivers pay on a periodic (such as annual) basis. Permit fees typically do not depend on the number of journeys made, or miles driven, by licence holders. Private hire circuits have an incentive to set fares at a level that maximises their profits. 

To maximise their profits they have to price so as to find a middle ground between fares set so high that relatively few passengers are prepared to travel with them and fares that are set so low that individual journeys earn drivers relatively little money. This 'balancing act' isn't affected by whether station operators levy fixed permit fees or not or by the level that any charges are levied at.