Extract A

Government intervention in urban transport markets

There was a time when private hire vehicles and traditional taxis dominated urban transit with minimal competition from public infrastructure. Cheap fuel, deregulated licensing, and convenient ride-hailing apps made private taxi travel extremely popular. Today, urban congestion and vehicle emissions are leading environmental and public health concerns. Nearly 70% of peak-time traffic in major metropolitan areas consists of single-occupancy private vehicles. (5)

Direct government subsidies for public transport, such as capping bus and tram fares at flat rates, can significantly reduce the reliance on private hire journeys. Comprehensive fare-reduction schemes covering municipal bus and rail networks have now been implemented in several major cities.

These subsidies reduce transit costs for commuters, making public transport a highly cost-effective option, especially for daily commuters and low-income groups. A subsidy that reduces public transport fares by 20% typically reduces the demand for private taxi journeys by approximately 15% in central city zones. (10)

However, municipal transit systems are still projected to require substantial public funding annually to maintain infrastructure. The market for micro-mobility alternatives, such as electric scooter shares, is growing rapidly, but long-distance commuting habits remain difficult to shift. Private ride-hailing platforms continue to invest heavily in promotional discounts and driver incentives to bypass the competitive pressure from subsidized public transit, frequently challenging local regulatory constraints. (15-20)

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