RIGA - "Insolvency petitions are a lot more pleasant than having our Baltic Taxi cabs shot at," quipped cab company shareholder and airBaltic President Bertolt Flick in response to a Riga court decision Oct. 13 regarding a petition against taxi company Transporta grupa Rigas Taxi. The cab company is 51 percent-owned by Flick's company Baltijas aviacijas sistemas, 49 percent by former privatization agency chief Janis Naglis, reports news agency LETA.
The petition calls for an insolvency case to be started against Baltic Taxi Ltd.
"Baltic Taxi is and will be a solvent company that is in business to stay," said Flick. He pointed out that this year its monthly turnover indicates that the company has cornered up to 50 percent of the legal taxi cab market.
Baltic Taxi Creative Director Juris Erts says that the insolvency motion comes as a "big surprise." He says that "Obviously, it's some sort of devious trick from our competitor," and that "such irresponsible processes can be launched by anyone, and then the honest company has to wipe off the mud slung. As is the company, so are its methods."
He believes that the petition could be connected to some old deal or transaction, as the company was established some time ago.
There was a spate of incidents when Baltic Taxi started operations, where several taxi drivers were confronted and had their cars damaged by drivers from competing cab companies, what was referred to as the 'taxi wars.'
Riga's Deputy Mayor Ainars Slesers responded by saying that the city council would not permit such wars, and that the 'red line' had been crossed. A proposal was made to reduce the large number of cab companies in Riga.
The Naglis-led Islande Hotel, in cooperation with airBaltic, already was operating its Airport Express transport service from the airport to downtown Riga. Business daily Dienas Bizness had reported that the Baltic Taxi and airBaltic plans were bad news for competing cab companies, particularly for Red Cab and Riga Taxi, who are already in a fierce battle for customers at the airport.
The taxi market in Riga will shrink by around 40 to 60 percent this year, and revenues on the taxi market will drop to approximately 1.5 million to 2 million lats (2.8 million euros), according to taxi company estimates.
Companies say it is difficult to give the precise value of the taxi market in Riga due to the large number of taxi services. According to estimates, each taxi, depending on the size of the company, brings in 300 to 800 lats per month. During the economic fat years this was from 1,000 to 3,000 lats per month.
"The fall has been dramatic; of course it is directly connected with the economic situation. The crisis has also affected the middle class, the main taxi business customers," says head of Riga Taxi Genadijs Aksjonovs. He added that the sector still has large growth potential, for example, in serving local governments. It is common practice abroad to entrust approximately 30 percent of local governments' transportation services to taxis, but municipalities in Latvia choose to maintain their own car pools and buses.
In order to survive the tough times with plunging turnover figures, taxi companies attempt to balance their costs and economize wherever possible. Several taxi firms have also started operating in the outlying regions in hopes of acquiring additional market share.