WATCH | Aron Gatt: ‘The problems in the cab industry have become too big to fix’

The President of the Light Passenger Operators Association (LPOA), Aron Gatt, warns that the problems facing the cab industry are too big to fix. 

In an interview with MaltaToday, the lobby’s president explains that the root of the industry’s problems is the rapid rise in the number of drivers and cabs, facilitated by lax enforcement and abusive operators. 

Gatt claims that instead of addressing abusive operators directly, the authorities skirt around the root of the problem by, among other things, punishing drivers with €500 fines for briefly parking their cabs on the street while on break. 

Speaking about the judicial protest the LPOA has filed against the government, Gatt states that this comes not after a failure to enforce the law, but after what he describes as collusion between public entities and abusive operators. 

This, he explains, creates issues for law-abiding operators in many different ways. One example is the proliferation of inexperienced cab drivers, which makes insuring a cab a nightmare. 

Despite what seems like futility, Gatt says that the lobby continues its fight for justice. 

The following is an excerpt of the interview

When we first met, the LPOA spoke about the need for authorities to regulate the cab sector. What has changed from that time? 

If you don’t mind, I’d like to take you back to 2020, not 2023. In 2020 there was a reform led by Ian Borg which lowered the barriers of entry to the market, which was a good thing. The problem with that reform, which I believe is the root of all problems, is that the permit was granted after a self-made declaration by the operator… 

After some time, we saw an explosion in the number of cars in just a matter of four years. This came about because of the legislation and the self-made declarations. We found that some operators would buy or rent garages, or even list non-existent addresses on the declaration, and they would end up with a fleet of 20, 50, or 350 cars operating from a one-car garage, or even inaccessible fields. 

We felt the brunt of all of this, especially the small operators… 

In the context of the ride-hailing sector, apart from one not having enough garage space for their vehicles, are there other practices used to create unbalanced competition? 

There is a model that is used by many operators called the 50:50 model. This works when a driver is employed and receives half the earnings of the trips they made. There’s nothing wrong with that at face value because the earnings are yours and you can give the driver whatever you want. 

But they’re employing the driver on a minimum wage basis and paying him the rest in after-tax allowances. As we’ve seen on the news, the money is listed as "protective equipment,” which reaches €1,200. What are you operating? A jumbo jet? 

If the tax department takes a look at these things, they’d be shocked. But these things have become so normal in this sector, that it’s not wrong… 

It’s good that you mention the tax department. Do you think there was a failure to regulate, not only by Transport Malta, but other entities? 

There’s also Identita and Jobsplus, whose job it is to protect the local sector, especially local and EU workers. The LPOA believes that there was a total failure in this sector, not just by one entity. We cannot place all the blame on the Transport Ministry, it’s impossible that no one notices certain things. 

If we showed all the malpractices to everyone and no one did anything, there’s more than meets the eye. We believe that it’s not just operators’ abuse. I think that that abuse is there, but it’s there because it’s facilitated by entities in our government.  

If I’m a particular businessman, can I invest millions in this industry on a permit that can be revoked immediately? If I invested all that money, someone, somewhere is reassuring me that I’ll be fine… 

Do you think this is a case of failure to regulate or was there collusion? 

From the experience that we’ve had in the last three years, we believe that it’s impossible that this was simply a failure in enforcement, there’s more than that. 

That’s why we took the steps that we took. We tried to discuss with ministers, but the action that was taken was either cosmetic or it was to say “be careful what you wish for because we can destroy you.” 

Last year, those who had one to four cars saw their permit renewal refused, despite the law being clear that PSGs are only a requirement for those with five or more cabs… 

Last year you organised a protest against what you described as “unsustainable” prices. Has the price situation improved? 

The price situation has been like this for a while. To see if prices can be fixed, we first have to find what led to this situation in the first place. Every market works on supply and demand. If we grew supply through unjust competition, and in a matter of two years we ended up with big problems where a sole operator cannot break even, it’s difficult to cope. 

We see operators failing, others caught on a hamster wheel without ever seeing a return on their investment. Prices are built on economies of scale. The more cars you have, it makes sense for you. If you have one or two, it’s very difficult. It’s only a matter of time before the sector relies on big fleets. 

Consumers obviously like lower prices. Won’t raising the prices shock the market? 

We came to a conclusion that these irregularities created unjust competition and a problem that is so intricate, it’s too big to fix. You can’t raise the price because there are too many cars. The problem is too enormous to be fixed so quickly.  

However, the actions taken are only ever cosmetic. Just so we can say that we are “serious.” Everything is as it was. The minister has changed, but nothing else has. Irregular operators kept growing and doubling their fleets. I cannot agree with the notion that the last minister had his faults but the current one is fixing the problem because it’s more of the same.