Seoul’s Taxi Shortage Problem: How in the World Will I Get Home?

Taxis are the backbone of transportation in South Korea for all, with college students being no exception. Whether it be hurrying to a class, traveling to a destination that cannot be reached via public transportation, or finding one’s way home after a night of heavy drinking, the Kakao taxi app never seems to fail a desperate customer. However, passengers around Seoul are taken aback by the increasingly long time it takes to haul a taxi, paired with dramatically rising fare prices. After subways cease operating past midnight, it is now not uncommon for customers to wait for up to two hours to find an empty taxi. The situation becomes all the more frustrating when one manages to stop a taxi, but the driver refuses to accept customers that are unable to travel a long enough distance that earns them significant profits for the night, which is something that happens more often than one might expect. Korea’s taxi shortage problem has come to attention post-pandemic as the Seoul Metropolitan government is scrambling to get more taxis on the street at night amid customers suffering. 

The number of late-night taxis rolling in Seoul has decreased by over 20% post-pandemic; the daily average was 26,566 cabs in December 2019, but it has decreased to only 20,056 since April 2022 [1]. Prior to the pandemic, Seoul’s privately-owned taxis operated under a three-shift system since 1978, which mandated private taxis in Seoul to take every third day off. In addition to this system, the shortage occurred as younger drivers moved from taxi driving to delivery and chauffeur services that earned them more profit during the pandemic. In an attempt to solve the post-pandemic taxi shortage, the Seoul Metropolitan government scrapped this system and announced a comprehensive plan that aims to have 27,000 taxis operating around the city from 11 PM to 2 AM. Seoul also announced it will attempt to recruit more taxi drivers through job fairs and subsidies for newly-hired drivers. In addition to reforms in the taxi industry, Seoul also added three late-night bus routes and extended the bus operation time by an hour.

Despite the introduction of such reforms, a myriad of problems remain for taxi passengers in South Korea, who often have interests that contradict those of taxi drivers [2]. During what is called the “late-nighttime frame,” taxi fares increase by 20% compared to normal operating hours; starting from December 2022, Seoul expanded the tiny window of time from the current 12 AM to 4 AM to 10 PM to 4 AM This means that customers will have no choice but to pay higher fares for the two additional hours. In addition, starting from February 2023, the base taxi fare in Seoul was increased to ₩4,800 KRW, which is a whopping ₩1,000 KRW won higher than previous years. The basic distance, which is the required distance to be traveled before the base fare increases, was also reduced by 20% from 2 km to 1.6 km. The new rates rendered taxis no longer an affordable option as customers are unwilling or unable to pay these much higher prices even when traveling short distances. While Seoul has defended its policies by citing the higher late-night taxi fares in other cities, such as New York in the United States, results of the city’s audacious plan were less than satisfactory; the increased number of taxis was only 1,208 per day, which was far below the city’s goal of almost 7,000. Taxi drivers were also unhappy with Seoul’s policy as well as they raised concerns that the price increase would turn away passengers who otherwise would have climbed into the backseat.

As Seoul’s taxi shortage problem causes inconveniences and tough deadlocks for all stakeholders involved; drivers will only return if they are guaranteed better pays [3]. Customers will only resume the rates at which they secured cabs if the prices are reasonable. Taxi companies and politicians will continue to walk the impossible tightrope between the customer and the driver, amid rising inflation rates and upcoming election cycles. Given such circumstances, taxi drivers have been proposing a “flexible fare system,” where passengers using cab services pay extra to secure their ride, or passengers pay an extra call fee to be connected to taxi drivers. Progress for such proposals has stalled, however, as governments feared backlash from constituents that demand such taxi services. As interest groups struggle to reach a consensus amid the taxi shortage, the principle of supply and demand remains more distorted than ever.

[1] Korea JoongAng Daily

[2] Korea Times

[3] Korea Times