Information for new operators

Sections of the Commercial Passenger Vehicle Industry Act 2017 relating to commercial passenger vehicle licences are now law. Information about the changes is available on the Industry reforms page.

The below information may be out of date as this page is currently under review.

Information on this page

If you're thinking about joining Victoria's taxi industry, there are many things to consider before you begin.

Background

New taxi licences are available to suitable applicants across Victoria, subject to a yearly 'upfront' fee. This fee is non-refundable, subject to CPI increases (minus .5 per cent), cannot be paid in instalments and the licences are not assignable.

In many instances it will not be as easy as just making an application, paying the applicable yearly fee and starting to operate a taxi where and when you want.

There are many requirements, obligations and costs in setting up and running a taxi business.

A large percentage of small businesses in Australia fail within their first year of operating. To run a successful business you'll need to consider:

  • whether you want to buy or rent a licence
  • what your ongoing operational and maintenance costs will be
  • how you will manage your cash flow and pay the bills
  • who will drive your taxi and how to find accredited drivers.

Victoria's taxi industry is changing. The industry has undergone major reforms and is moving from a highly regulated marketplace to a free market environment in which innovative, customer-focused services have the best chance of succeeding.

It's important to realise that operating a small business is not just about working for yourself – it's also about:

  • managing other people
  • undertaking regular administrative tasks
  • utilising your industry expertise and/or other acquired skills
  • having a long-term vision to grow and succeed.

You'll also need to be careful not to underestimate your costs or overestimate your revenue – it's essential to do your research, develop a business plan, have financial support and to seek professional advice. Below, we outline some of the financial considerations and the steps involved in establishing and running a taxi business.

Research

Before you decide to enter the taxi industry, it's a good idea to talk to existing industry participants. When you have a clear picture of what's involved in running a taxi business, you'll be able to make an informed decision about whether or not to apply for a licence.

Some of the individuals or organisations you might wish to consult include:

If you're thinking about joining the industry, it's a good idea to do some reading about the Taxi Industry Inquiry, and the government's reform of the taxi and hire car industry which the Taxi Services Commission (TSC) has been tasked with implementing.

The industry is regulated by laws including Transport (Compliance and Miscellaneous Act) 1983, and other current regulations. These are all administered by the TSC. Fines or other regulatory actions will apply if you do the wrong thing.

On 1 July 2013, the TSC was established as the regulator (the former Victorian Taxi Directorate). Existing participants or those entering the taxi industry will have frequent contact with the TSC, so take a moment to learn more about the TSC's responsibilities.

There are many decisions you will need to make before you put your vehicle/s on the road. You will need to:

  • check if you are eligible to apply for a new taxi licence
  • select where you want to operate - your zone (and consider competition in these areas)
  • decide the type of licence you want - conventional taxi or Wheelchair Accessible Taxi (WAT)
  • consider if you should buy a licence, purchase one for a year from the TSC (from 30 June 2014) or lease from a licence holder
  • ascertain whether to purchase a new or second hand vehicle (including any equipment and fit-out costs)
  • determine fares and pricing structure that best fits your business – for country and regional zones, a new system of price notification allows operators to set their own fares in line with their business needs
  • identify market opportunities – where are the gaps, what are the peak and non-peak periods (taxi occupancy rates), do you focus on special events (eg. cruise ship arrivals, major sporting or cultural events), have you considered approaching local business, organisations or entertainment venues/clubs
  • source appropriate vehicle/business insurance.

Note: Taxi occupancy means the proportion of time an 'on road' taxi is actively occupied by a paying passenger.

Licence options

There are a number of different ways to get a taxi licence. You can choose to:

  • buy an existing perpetual (on-going) licence on the open market
  • rent an existing licence from a licence holder (this is called an assignment)
  • purchase a licence for an annual fee from the TSC.

You should take your time and carefully consider how the Victorian taxi and hire car industry is changing, your personal circumstances and your financial position before you decide on what option is most suitable for you.

Note:

  • the TSC does not guarantee the current or future value of perpetual licences purchased on the open market
  • taxi licence assignments are a commercial arrangement between two parties which is not regulated by the TSC
  • all licences purchased from the TSC are non-refundable.

Applying

If you wish to operate a taxi in Victoria, you need to apply to the TSC for accreditation as a operator. See Taxi owners and operators for more information.

There are costs involved in applying for a licence and the process of accreditation can take time. Some additional costs you may incur include the TSC application fee.

Before you submit an application form, ensure you have completed all requirements – incomplete applications will not be processed.

Setting up your business

Now that you have your operator accreditation and licence, it's time to set up your business. From getting a car on the road, to driver training and handling complaints, there's a lot you need to manage.

It's important that you understand your role and obligations as a taxi operator including:

  • the implied conditions for all driver agreements
  • the price notification system in country and regional areas
  • ensuring that your taxi(s) conform to strict safety regulations including GPS tracking, 24 hour monitoring and emergency response capability
  • considering a customer charter to set the standards and expectations for the services you provide
  • being responsible for the services provided by your drivers
  • making information about your services and performance readily available
  • having a clear complaints handling system in place
  • adhering to new regulations in relation to taximeters and dome lights.

Here are some other useful links to help get you on the road:

Running your business

With a vehicle/s now on the road, you're officially part of Victoria's taxi industry. But don't get too comfortable - ongoing operational costs can be surprising, and you need to be prepared. Have you thought about?

  • How you will manage your cash flow?
  • How fluctuating fuel costs will affect your business model?
  • What you will do if your vehicle is off the road for repairs – do you have a contingency plan?
  • How you will cover any costs caused by passenger or driver damage to your vehicle/s?
  • Do you have an ongoing vehicle maintenance plan?
  • How will you attract and retain drivers?

Other costs to consider include:

  • fuel
  • complaints handling
  • insurance
  • registration and Transport Accident Charge
  • tolls
  • vehicle repairs, maintenance and cleaning
  • administration (including phones/equipment)
  • vehicle costs (purchase, taxi equipment/livery, tyre replacement etc)
  • building and site costs, rental etc (if applicable)
  • vehicle value depreciation/future replacement
  • network affiliation costs
  • driver training/uniforms
  • data storage/reporting
  • complying with government standards/regulations
  • accounting, legal or other professional costs.

Note: For a cost profile for a standard metropolitan taxi, see Table 3.5 - Representative cost profile for 2014 (excl GST) (page 44) of the Essential Services Commission 2014 - Taxi Fare Review 2013-14 — Final report, March.

The links below may be useful:

More information

If you would like more information on becoming a taxi operator, contact us.

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