The minibus taxi industry, the lifeblood of the SA economy which transports more than 16 million people a day, plans to hike fares for the first time since 2019 to make up for higher petrol prices, potentially dealing a blow to consumer confidence left battered by the pandemic-induced economic crisis.
“Our view is that the current increase in petrol prices has opened the possibility of a fare increase that cannot be avoided. The industry is still reeling from the impact of Covid-19 on its operations,” said Thabiso Molelekwa, spokesperson of the SA National Taxi Council, the sector’s largest representative body and one of the country’s largest industry organisations.
Molelekwa’s comments to Business Day come in the week when motorists in Gauteng started buying a litre of petrol at a record price of R17.32 on Wednesday after the Central Energy Fund announced hikes of R1/l for the higher-octane fuel last week.
The taxi fare increases, which are likely to be implemented in June, could further squeeze low-income consumers, many of whom spend the bulk of their money on transport and at grocery chains for food as they battle job losses and high household debt.
Econometrix chief economist Azar Jammine said the impact on consumer confidence will depend on the size of the increases.
“It will depend on how much the taxi industry increases their fares. If they increase them say by 3% to 4% in line with inflation, they won’t have a dramatic effect on the overall economy. But if the increases are more than 20%, they will have a huge impact on ordinary consumers,” said Jammine.
The last time the industry, which spends more than R20bn on fuel, hiked fares was in July 2019 when it implemented an increase of between 10% to 15% across the country.
Molelekwa said even with eased travel restrictions during the Easter weekend, the industry was not able to recoup losses of at least R1.5bn suffered last year when millions of people were ordered to stay at home during the hard lockdown.
“The Easter weekend was not that good for the industry. The long-distance operators did not make good money because long-distance travellers did not turn out in the numbers that we anticipated,” he said.
The Easter weekend was not that good for the industry.
The taxi industry, scorned by many motorists for reckless driving and mafia-style violence, is among sectors which was heavily affected by the Covid-19 lockdown, which saw interprovincial and cross-border taxi operations prohibited during the hard lockdown phase.
The industry is yet to accept the R1.14bn Covid-19 relief fund the government has offered, rejecting the stringent conditions attached to it and aimed at formalising the sector. It has argued that the relief was too little compared with the losses it incurred.
The fuel price increase, said Theo Malele, spokesperson of the National Taxi Alliance, SA’s second-biggest taxi organisation, was a “rude awakening to both the taxi industry and government to speedily resolve the long outstanding issue of subsidisation of taxi commuters”.
Economists said other industries are expected to follow in passing on the costs of transport to consumers.
“This is another blow to consumer confidence. The basic cost of living, which is transport, is going up and nobody can avoid that,” said Ian Cruickshanks, chief economist at the SA Institute of Race Relations.
“The cost of moving consumer goods as well as manufactured goods is going to go up. It’s yet another blow to already beleaguered consumers who will be forced to cut back on basic and discretionary spending. It’s not good at all, I’m afraid.”