Taxi fare scandal in Azerbaijan – are 'tomatoes' to blame?

Taxi services in Baku are at the center of a scandal, as the state has announced a single fare policy for taxis in the capital. Experts warn this may result in a pseudo-monopoly. 

Economists have already been predicting a rise in the price of public transport, with the metro closed due to the coronavirus pandemic. The ‘tomatoes’ that appeared in the capital of Azerbaijan in mid-August are blamed for everything that is happening: this whole story began on August 12, when the President of Azerbaijan Ilham Aliyev got acquainted with the new LEVC TX taxi cars brought to Baku. Because of the bright red color, these cars immediately received a new name among the people – ‘tomatoes’.

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And this is no coincidence: after all, they first appeared nine years ago …

“Eggplants” – a sign of progress

After it became known about the Eurovision Song Contest 2012 in Baku, the capital of Azerbaijan began to rapidly modernize. In a short time right on the water – on the Baku coast of the Caspian Sea – the Crystal Hall concert complex appeared, where the competition itself was held, and about a year before that, “London taxis” – cars of the TX4 brand began to ride through the streets of the capital.

Because of their strange color for Baku people, these cars were named “eggplants”. It has become prestigious to ride in them, but expensive in comparison with other taxis.

True, the life of “eggplants” was short. Several years later, they could be bought on the secondary car market for only 20,000 manats [about $11,700].

These cars appeared on the secondary market for a reason. They were initially issued to drivers on leasing terms – taxi drivers worked according to the established “plan”, and when the operator company took from them the amount set for each car, the car automatically became the property of the driver, who was free to do with it what they wanted.

Many of the “eggplants” have now been repainted by their owners in other colors.

The boom of taxi companies

Just at the moment when the “London” taxis in Baku had outlived their usefulness, a real boom of companies offering taxi services began in the capital of Azerbaijan. One after another, new companies appeared with short telephone numbers, offering significantly cheaper taxi services in comparison with previous years.

Also, international taxi services appeared in Baku, for example, Uber and Bolt, which were loved by young people – they offered their services in mobile applications.

Drivers complain about low prices

In pursuit of passengers, companies were forced to cut prices. If for 10 kilometers of road about five years ago in Baku they paid about 8-10 manats [about $4.7-5.8], now they will be taken for the same distance for half the amount.

Taxi drivers are not satisfied with such prices, but many are forced to work.

“I work as a teacher at a school, but this salary is practically impossible to support a family. Therefore, you have to earn money on your car. Although it is also unprofitable,” says one of the taxi drivers.

According to him, to become a taxi driver, the first step is to register with the tax office. “After that, you agree with one or several taxi services at once, so that you will be provided with orders according to a special program. I earn about 200 manats [about $118] per week. Of this amount, 20 percent is taken by the company, which also pays taxes for me. About half of the money earned goes to fuel. But the car also requires systematic maintenance and service. It turns out that we work without earnings, barely enough for bread,” he complains.

The driver also noted that at current prices, it is relatively profitable to work as a taxi driver on vehicles with diesel or hybrid engines. In this situation, the fuel savings are significant.

New taxis – “tomatoes” and the consequences

After hundreds of the new red “London” taxis appeared in Baku in mid-August 2020, government agencies came up with a proposal for reforms in this area.

The Baku Transport Agency (BNA) proposes to create a single dispatch service for all taxi companies, as well as establish a single tariff.

“These proposals violate the rights of market consumers, and will lead to an environment without any competition. But this is regulated by anti-monopoly legislation. Therefore, the state antimonopoly service is obliged to respond to such initiatives. These issues are not within the competence of the transport agency,” says economic expert Osman Gunduz.

The words of the BNA official representative Hikmet Babayev in an interview with one of the TV channels caused a great resonance in society. He literally said: “Taxi prices have dropped to the point where they are almost equal to the prices of buses. It doesn’t have to be this way. You can use a taxi, but you cannot turn it into a daily means of transportation. For this there is public transport.”

After these words, users of social media attacked Babaev with sharp criticism, and he had to close his Facebook page.

Will the cost of travel on buses also rise?

Economist Gubad Ibadoglu predicts a rise in bus fares.

“It is expected that the price of travel on buses will rise to 50 qepiks [about 30 cents]. (ed. Currently, travel on buses and metro costs 30 qepiks),” he wrote on his Facebook page.

Due to the coronavirus pandemic, the subway has not been operating in Baku since June 2020. Buses operate only on weekdays; on weekends and holidays, their movement is prohibited.

A heated discussion of the problem of taxis and public transport in social networks continues, there is no official decision on this issue yet. The government does not comment on the proposal of the Baku Transport Agency.