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Home > Taxis & hire vehicles > About taxis & hire vehicles > The taxi industry

Structure of the taxi industry

The Victorian taxi industry is regulated by the State Government through the Victorian Taxi Directorate.

Note: The Department of Transport has not extended its agreement with BSX Services Pty Ltd (BSX) to manage the trading arrangements associated with the transfer and assignment of taxi licences in metropolitan Melbourne. This information on this page will be updated shortly.

Licence holders

Metropolitan taxi-cab licences may only be purchased through industry brokers. The Department of Transport has not extended its agreement with BSX Services Pty Ltd (BSX) to manage the trading arrangements associated with the transfer and assignment of taxi licences in metropolitan Melbourne. This information will be updated shortly.

People who want to become licence holders must obtain taxi industry accreditation.

As at 1 April 2011, metropolitan taxi licences had an approximate market value of $512,500. This does not include the value of the vehicle.

Licence holders can hold multiple licences. Some licence holders also operate taxis but most do not. See licence assignees below.

The Victorian Government has announced the release of additional taxi licences for the Melbourne region to reward career taxi drivers and provide a more timely and efficient taxi services for taxi users, especially those with special needs.

Licence assignees (lessees)

More than 60 per cent of licence holders do not operate the licences they own. They assign (lease) the right to operate a taxi under their licence to an assignee (lessee) who purchases, maintains and operates the taxi and delivers the service. The annual assignment (lease) charges are typically in the order of $24,000 per annum.

The Department of Transport has not extended its agreement with BSX Services Pty Ltd (BSX) to manage the trading arrangements associated with the transfer and assignment of taxi licences in metropolitan Melbourne. This information will be updated shortly.

Typical assignment periods range from 12 to 36 months and assignments must be arranged through licensed taxi brokers. People who want to become licence assignees must obtain taxi industry accreditation.

Over the last 17 years, the number of licences that are assigned has increased dramatically. Many licence-holders are using their licence as a long-term investment. The Government is concerned about this shift from owner-operator services to an investor-driven industry. Of particular concern is the impact on customer service when the industry is focused on investor returns. The Government is taking measures to overcome this situation as part of its taxi and hire car reform.

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Drivers

While many operators drive their own taxis, many also engage drivers to cover shifts they are unable to cover themselves. Taxi fleet operators engage large numbers of drivers. Such engagements require the driver and the operator to sign a Model Taxi Bailment Agreement.

The Bailment Agreement allows a taxi to be hired to a driver for an agreed period on agreed conditions. Drivers are not employees and are more akin to sub-contractors. The Bailment Agreement provides for fare revenue collected by the driver to be shared - generally on a fifty-fifty basis, but not limited to this model - with the taxi owner.

Bailment Agreements are not regulated by Government but are a civil matter. If you have concerns about your agreement, you should seek legal advice.

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Licence brokers

The Department of Transport has not extended its agreement with BSX Services Pty Ltd (BSX) to manage the trading arrangements associated with the transfer and assignment of taxi licences in metropolitan Melbourne. New information about licence brokers will be added to this website shortly.

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Network Service Providers (depots)

Taxi operators are required to operate their cabs from network service providers authorised by the Government because:

The network service providers provide a centralised booking and dispatch service for customers. More than 50 per cent of taxi services are pre-booked through this system.
This system provides a safer work environment for drivers. Metropolitan, outer suburban and urban network service providers use a Geographic Positioning System (GPS) to monitor the location and movement of each cab while it is in service.

Each taxi operator enters into an agreement with an authorised network service provider and pays a fee for service. The terms and conditions of network service provider membership are not regulated by Government but are commercial agreements between the operator and the network service provider. If you have concerns about your agreement, you should seek legal advice.

Drivers also have individual agreements with their network service provider for access to network service provider dispatch systems and services. These agreements are not regulated by Government. Again, if you have concerns about your agreement, you should seek legal advice.

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Wheelchair-accessible taxis

Most wheelchair-accessible taxis are operated by owner-drivers. Drivers are required to operate through network service providers (depots) which provide a dedicated wheelchair-accessible taxi booking service.

In order to be eligible to drive a wheelchair-accessible taxi, drivers must complete the Course in Wheelchair-accessible Taxi Services.

The wheelchair-accessible taxi fleet is meeting present demands and is being closely monitored.

For more detailed information about wheelchair-accessible taxis and initiatives, see Taxi accessibility.

Peak service (green-top) taxis

Peak service taxis are operated by experienced taxi drivers between the hours of 3 pm and 7 am and during specified major events, in the metropolitan taxi zone.

The Government has issued a total of 600 Peak Service Licences over the six years 2003 to 2008, with approximately 100 licences issued each year.

For more information, see Peak service taxis.

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