Busan Taxi Company Closing for the First Time in History... Drivers Leaving, Taxis Stalled, and a Flood of Lawsuits: "We Can't Endure Anymore"

[Asia Economy Yeongnam Reporting Headquarters Reporter Kim Yong-woo] The taxi industry, which has been hit hard by the direct impact of COVID-19 such as driver turnover and is on the brink of collapse due to a series of lawsuits over ‘working hours,’ is now facing the feared shock of business closures.

Daedo Taxi, a mid-sized taxi company in Busan, will close down in October. This is not a temporary suspension but a complete shutdown of the company.

Previously, Geumryun Industry, a taxi company in the Busan area, also entered a full suspension due to financial difficulties.

As the industry's financial difficulties continue, the first closure among taxi companies in the Busan area has become a reality this time.

According to the Busan Taxi Transportation Business Association on the 30th, Daedo Taxi in Gamjeon-dong, Sasang-gu, announced a ‘closure notice’ stating that it will maintain its taxi transportation business license until the 30th of next month and will begin closure from October.

This will be the first case of closure in Sasang, Busan, not involving transfer or suspension.

Generally, when a taxi company faces financial difficulties, it reduces its business scale by transferring the company to another operator or returning some licenses to the local government to receive reduction compensation.

Daedo Taxi has announced a complete closure without receiving reduction compensation or transferring the company.

It is known that the possibility of receiving reduction compensation from Busan City by returning all held licenses is low, and the taxi industry as a whole is in the worst condition, making transfer impossible.

With the outbreak of COVID-19, Daedo Taxi recorded a deficit of about 1.17 billion won in 2020 and about 1.11 billion won last year.

Of the 118 licenses held by the company, 54 are already in a ‘suspended’ state. Since cars without drivers have been disposed of as used cars and the licenses have been suspended, the actual number of taxis in operation recently was about 64.

Do Hyeong-chan, CEO of Daedo Taxi, said weakly, “The company has a history of about 60 years, but it is in a state where it cannot endure any longer, and there is no small hope to overcome the future crisis.”

CEO Do said, “After last year’s bewildering Supreme Court ruling on drivers’ ‘prescribed working hours,’ we were caught up in a series of lawsuits, making it impossible to continue.”

Jang Seong-ho, director of the Busan Taxi Transportation Business Association, explained the regrettable situation, saying, “All taxi companies are in the same difficult situation, so it is not possible to transfer licenses.”

Director Jang said, “Since the agreed prescribed working hours between labor and management were not recognized, we faced a lawsuit crisis, and unlike buses, we do not receive support while taxi fares are controlled, putting the taxi industry in a desperate situation.”

A representative of a corporate taxi company complained, “Temporary measures such as taxi rotation systems or loan guarantees are not solutions at all,” and “The measures proposed by the government or Busan City will only be stopgap.”

The taxi association expressed concern that other companies might also face a series of bankruptcies as the first closure case following a full suspension of taxi companies has emerged.

A Busan Taxi Association official said, “The government and local governments need to sit down with the taxi industry and discuss ways to revitalize the taxi industry,” and added, “I hope that in-depth discussions on government financial support as actual public transportation will be held as soon as possible, rather than just controlling taxis as public transportation only when necessary.”

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