VICTORIA’S taxi industry is dominated by a few major taxi license owners, the largest of whom have obscured the full extent of their wealth by listing their holdings under a string of different names.
There are 5250 taxi licences in Victoria – valued at about $480,000 each – yet just eight businesses own more than 10 licences.
The full list of license owners – never before revealed but seen by The Saturday Age – shows an industry controlled by a small school of big fish, with intricately intertwined business interests.
They are: the Gange Corporation, owners of Silver Top Taxis; Cabcharge, which owns 13Cabs; the Granger family, which is linked to Silver Top and 13Cabs; John Vlassopoulos, who owns Ambassador Taxis; Jim Dendrinos of Bayside Taxis; the Shehata family of ECM Taxi Brokers; Phillip Humphreys, who is linked to Silver Top; and Murrell Enterprises, which dominates Geelong’s taxi industry.
Swimming around them are hundreds of smaller fish who own between one and 10 licences. Some of them are owner-drivers who hit the road every day to make a living. Some licences serve as investment funds for small collectives that effectively have no active involvement in the industry.
Together, big and small, these are the people who own Victoria’s taxi industry, and who are fighting a desperate rearguard action to fend off reforms being considered by the Baillieu government, which they argue will trash what they have spent their lives labouring for.
The Gange Corporation, directed by brothers Kevin, John and Alf Gange, is easily the largest operator in Victoria’s taxi industry, with almost 120 licences held under different names. Fifty-five are registered under the name of defunct taxi company Astoria, 41 in the name A. Gange, 10 in the name Littles and 12 to Silver Top Taxis.
The Gange Corporation also owns Silver Top, which together with 13Cabs has cornered the lucrative taxi booking business, taking a $7000 annual network affiliation fee from almost every working cab in Melbourne.
13Cabs is owned by Cabcharge, which also owns 24 taxi licences under the name Black Cabs, and six under the name Arrow Taxi Services.
Cabcharge is also linked with the Granger family, a veteran player in Victoria’s taxi industry, which owns 24 licences. The late Noel Granger, a 1956 Olympian, acquired his licences in the early 1960s, and was chairman of Silver Top Taxis from 1993 to 2003, before it was bought by the Gange family. Granger Transport also owns more than 5000 shares in Cabcharge, a 0.5 per cent stake.
These are among the old guard of Victoria’s taxi industry. Other newer entrants have also amassed large licence holdings. John Vlassopoulos owns 31 taxi licences as well as the Ambassador taxi brokerage and driver training school in North Melbourne.
Jim Dendrinos of Bayside Taxis, a depot in Cheltenham, owns 18 licences. The Shehata family also owns 18 licences. Michael Shehata bought his first taxi licence in the late 1980s, paying about $100,000 to start his own taxi business. Over time he bought ”one after the other”, he said.
Metropolitan taxi licences were trading at $515,000 a year ago, putting the value of Mr Shehata’s investment at more than $9 million.
But he insists that he is not wealthy and in fact cannot contemplate retirement, even though he is in his 70s.
Mr Shehata, who emigrated from Egypt 50 years ago, still runs a taxi business in Reservoir, not far from his home in working-class Thomastown in Melbourne’s north.
He says he borrowed to grow his taxi business, to ensure a livelihood for his wife and five children, all of whom are in the business.
”That’s what makes me borrow all this money and to make the business, because I don’t like my kids to be on the dole, because I myself didn’t take one cent in my life from the dole or from the government,” Mr Shehata said.
”And I like my kids to be the same, to depend on themselves and to work hard and survive. That’s why we make this a family business.”
The Baillieu government has been handed an extensive list of reform recommendations for the industry, following an 18-month-long industry inquiry chaired by former Australian Competition and Consumer Commission head Professor Allan Fels. Professor Fels has put forward a stridently free-market formula for overhauling an industry many feel provides unacceptably poor customer service.
The single most contentious recommendation of the inquiry’s 271-page final report is the call to remove restrictions on licence numbers, and to lower their price to $20,000 a year over five years.
Professor Fels argues this would break existing licence holders’ stranglehold on the industry and increase the number of cabs on the street. Under his reform model, licences could be rented out at $20,000 a year, a drop from the current annual rate of about $30,000.
Currently only the state government can issue new licences, and does so according to a ”public interest” test. In the inquiry’s view, these restrictions have pushed up licence values unreasonably, turning them into cash cows for investors with little or no stake in service quality or driver welfare.
Attempts to speak to Silver Top managing director Kevin Gange were unsuccessful. Also president of the Victorian Taxi Association, he evidently prefers to let the industry group speak on his behalf and has not been interviewed in years. The association’s council membership is mostly drawn from Silver Top and 13Cabs.
Association spokesman David Samuel insists the association does not work to serve the interests of licence holders. ”The VTA constitution is explicit that it does not protect the interests of licence holders, because what we didn’t want to be doing was propping up the value of the licence, it’s not our role as we see it,” Mr Samuel said
But the Victorian Taxi Association is not the only industry voice that has campaigned against the Fels reform blueprint. John Vlassopoulos is president of Taxi Industry Stakeholders Victoria, a collection of owners and operators who formed a new lobby group last year. The group’s spokesman, Harry Katsiabanis, who is himself a multiple licence owner, and Professor Fels have clashed in the media in recent weeks over the best way forward for the industry.
”How would Professor Fels feel if someone told him they were going to take away everything he’d worked for?” Mr Katsiabanis said.
The public has until January 30 to respond to the Fels report and the government is expected to make its own response in April. The extreme apprehension within the industry appears to have had a depressing effect on licence values.
In November, seven licences were traded for $350,000, down 28 per cent from $480,000 in October.
Professor Fels said licence values must drop to encourage new people into the industry and improve the working conditions of taxi drivers, who are among society’s lowest-paid workers.
A taxi driver who has followed the Fels inquiry closely since it began said Victoria’s taxi industry was dominated by an entrenched cabal that consistently fought to lock new competitors out.
”Every time you open a closet you find the same five people in there,” he said.
But Professor Fels effectively conceded when he handed in his final report in September that small-time licence owners risked taking a heavy financial blow under his reforms.
Single licence owner Yakov Korolik, 72, said he would be financially stricken by a plunge in licence values. He considers his licence to be his ”superannuation”.
The retired taxi driver assigns his licence to another operator for $26,000 a year. Mr Korolik, who came from Russia ”with $10 in my pocket”, paid $35,000 for his licence in 1983 and drove a cab for three decades. In his view, an industry built up by many hard-working migrants has been unfairly attacked. ”The government found an easy target – the taxi industry.’