Taxi services in Kuwait suffers huge losses

$103.9mln in the last 3 months

  
Image used for illustrative purpose. Close-Up Of Illuminated Taxi Sign At Night.

Image used for illustrative purpose. Close-Up Of Illuminated Taxi Sign At Night.

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KUWAIT CITY: According to the report gathered from people operating in the car rental and taxi sector, most taxi and car rental companies did not benefit from the six-month delay in payment of installments, given that these companies are not financed by the banks but by financing companies.

In the “return to normalcy” plan recently approved by the government, the resumption of public transportation will be part of the fourth phase, but with strict adherence to social distancing precautions which would limit the earnings of taxis after operations start.

The taxi services in Kuwait have been suffering since the middle of March after the government decided to suspend all public transportation in a bid to contain and prevent the spread of COVID-19 as a temporary precaution.

According to the report gathered by the daily from people operating in the car rental and taxi sector, most taxi and car rental companies did not benefit from the six-month delay in payment of installments, given that these companies are not financed by the banks but by financing companies.

In the “return to normalcy” plan recently approved by the government, the resumption of public transportation will be part of the fourth phase, but with strict adherence to social distancing precautions which would limit the earnings of taxis after operations start.

In this context, some owners of taxi companies have affirmed that the sector has incurred a huge loss due to suspension of taxi operations in the country, which amounts to an estimate of about KD 32 million in the last three months for a total of 12,000 taxis operating in the local market. In addition, there are approximately 420 bureaus – some are for small enterprises – which stopped their businesses and suffered losses of approximately KD 5 million losses in operation earnings for it during that period from the installments, rents and salaries of employees incurred by the owners of those companies, which caused unprecedented losses in the sector.

A taxi company owner Abdullah Al-Daihani explained that the owners of taxi companies are now suffering every month from rental obligations of the offices as well as the salary obligations of their employees and loan installments which amount to a total of KD 4,000 per month.

All this without another source of income to support these companies. There are some offices that are still paying salaries to their workers, as most taxi companies have approximately 30 drivers working on cars whose salaries range between KD 250 and KD 300. The maximum number of taxis allowed for a company to own is 30.

Al-Daihani stressed that suspension of taxi services has created a huge burden on the companies operating in this sector, as it requires maintenance and greater attention compared to being operating regularly. He called on the government to take into consideration the conditions of those companies and provide soft loans to them.

Al-Daihani concluded by lamenting the government’s plan to limit the number of passengers allowed in a taxi to one, indicating that such measures will limit the earnings of the taxi business.

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