Accelerating Mobility Innovation through Taxi Industry and Platform Integration

Amendment to the Passenger Transport Act for Institutionalizing Transportation Platform Business to Take Effect from the 8th

[Asia Economy Reporter Kangwook Cho] The integration of the taxi industry and platforms is expected to become more active, accelerating mobility innovation that provides new services.

The Ministry of Land, Infrastructure and Transport announced on the 7th that the Passenger Transport Service Act, passed by the National Assembly in March last year to institutionalize various transportation platform businesses, and the Enforcement Decree of the Passenger Transport Service Act, approved at the Cabinet meeting on the 30th of last month, will be enforced starting from the 8th.

To resolve conflicts between new and traditional mobility, a 'social grand compromise' among the government, National Assembly, taxi industry, and platform industry (March 2019), and the government's announcement of the 'Taxi System Reform Plan' (July 2019) led to the passage of the amended Passenger Transport Service Act last March, which institutionalizes platform-based transportation businesses within the legal framework.

The amended Passenger Transport Service Act reorganizes the existing transportation business system by establishing transportation platform businesses, categorized into three types: platform transportation, platform franchise, and platform brokerage.

Additionally, based on recommendations from the 'Mobility Innovation Committee' established after the law amendment to develop detailed institutional plans, the government reflected detailed measures such as the Passenger Transport Market Stability Contribution Fee, licensing criteria for platform transportation businesses, activation plans for the integration of platforms and taxis, and consumer protection measures in the subordinate legislation of the Passenger Transport Service Act.

For the newly established platform transportation business sector, the business operator must directly secure vehicles and platforms to operate transportation services. Those intending to operate platform transportation businesses must meet licensing requirements including platform capabilities (call/reservation, vehicle control, fare prepayment, etc.), vehicles (at least 30 vehicles with 13 seats or fewer), garages, and insurance.

Licensed operators must pay 5% of their sales (or choose between KRW 800 per trip or KRW 400,000 per licensed vehicle) as the 'Passenger Transport Market Stability Contribution Fee.' However, small startups with fewer than 300 vehicles will receive a reduction of 25% to 50%. The contribution fee will be used to stabilize the transportation market and improve working conditions for taxi drivers, promoting coexistence between new and traditional mobility.

Regulations such as fare controls, business area restrictions, appearance regulations, and vehicle acquisition methods (rental cars allowed) will be significantly relaxed for platform transportation businesses. Under this eased regulatory environment, platform transportation operators can rapidly develop and launch innovative models that respond to diverse user demands and needs.

Licensing for platform transportation businesses will be conducted through the Platform Transportation Business Deliberation Committee (chaired by the Minister of Land, Infrastructure and Transport). The committee will comprehensively review factors such as whether differentiated services are provided, the adequacy of consumer and worker protection measures, and the supply status of transportation capacity by region.

Platform franchise businesses, where platform operators secure taxis as franchisees to provide paid transportation, will operate under a fare self-reporting system if certain conditions are met. Platform franchise taxis operating on a reservation or call basis are expected to launch more innovative service models combined with monthly subscription fares, pre-determined fares, and other options based on the fare self-reporting system. Currently, about 30,000 brand taxis operating as platform franchises, including KakaoT Blue, Macaron Taxi, Banban Taxi Green, and Uber Taxi, are in service.

With the legal basis established for platform brokerage businesses that mediate transportation services through intermediary platforms under the Passenger Transport Service Act, stable operations will be possible after registration procedures, allowing operators to offer various brokerage fees and innovative brokerage services.

After the law takes effect, businesses wishing to obtain licenses for platform transportation or register as platform brokerage operators can submit applications with required documents and business plans to the Ministry of Land, Infrastructure and Transport. For platform franchise businesses, if operations span two or more cities/provinces, applications should be submitted to the Ministry of Land, Infrastructure and Transport; otherwise, applications should be made to the relevant city or province.

Eom Myung-so, Director General of Comprehensive Transportation Policy at the Ministry of Land, Infrastructure and Transport, stated, "The mobility industry is currently at a turning point as it converges with ICT technology, making the amendment and enforcement of the Passenger Transport Service Act highly significant. We expect many new and innovative mobility services to be launched and the integration of taxis and platforms to become more active following the enforcement of this law. The government will continue efforts to ensure that convenient mobility services desired by the public are routinely provided and that the mobility industry, including taxis, can sustainably grow."

This content was produced with the assistance of AI translation services.