The Y-plate mess: Putting the genie back in the bottle

The government’s recent attempt to enforce regulation in the ride-hailing sector has been described as trying to "put the genie back in the bottle" after years of neglecting abuse and refraining from enforcing the law.

A number of cab operators are currently appealing the revocation of their licences after Transport Malta (TM) clamped down against those who do not have proper garaging facilities. However, more than 90% of cabs that were banned from operating have returned on the road pending the outcome of their appeal, causing frustration among law-abiding operators who have suffered while competing on an uneven playing field for years.

But how did we get here, and who is to blame?

 

2019 PSG reform

Many within the industry view 2019 as a turning point for the local sector, as it marked the introduction of new rules that drastically lowered the price of starting a cab business. When Ian Borg headed the Transport Ministry in 2019, TM launched the Public Service Garage (PSG) reform, which aimed to "raise the standards and regulation" of the cab sector. However, the reform’s true intention was to open the ride-hailing market by lowering the barriers to entry.

Among the reforms, the PSG requirement was waived, and a new role of "operator" was created, responsible for the fleet of cabs. A vehicle no longer needed to be an M1 category vehicle to operate as a taxi.

 

An explosion in Y-Plate vehicles

Although the PSG reform was introduced just months before the onset of the COVID-19 pandemic, which impacted all sectors, it successfully opened up the market.

In 2020, the number of Y-plate vehicles decreased by 8%, but this was reversed with a 13% increase in 2021, bringing the total number of cabs to 2,575. According to National Statistics Office (NSO) figures, Malta added 932 cabs in 2021 and another 868 in 2022. Between 2020 and 2024, the number of cabs doubled.

 

Unsanctioned abuse

As the cab sector grew under Ian Borg and later Aaron Farrugia, authorities tasked with regulating operators allowed the market to run itself.

In July 2023, the Transport Ministry introduced new rules to better regulate the sector. Under the new regulations, third-country nationals (TCNs) would need a Maltese driving licence to obtain their driver’s tag. Operators were also required to present an annual site plan of the garage where their vehicles are parked when not in use, showing the spaces for cars exclusively used by the operator.

However, abuse continued as both large and small operators circumvented the garaging rules. MaltaToday found numerous examples of Y-plate vehicles hidden in public places across the island. Some illegal parking cases were known to Transport Malta but went unsanctioned, leading to public outcry and frustration among law-abiding cab operators.

Just a few months later, the Transport Ministry, now under Chris Bonett, announced its intention to review the regulations once more.

 

An oversaturated market

While requirements were lowered, Malta saw an influx of cabs, but the need for drivers became more pressing. The increasing demand for cab rides, facilitated by online platforms, attracted thousands to the sector.

In the beginning, reasonable fares and comfortable working conditions drew many small operators. It was possible to earn good money while working on the driver's terms. But as the market grew and the supply of drivers exploded, prices fell.

When the PSG reform was introduced in 2019, TM issued 3,090 driver tags. After the pandemic, the number of issued tags dropped to below 2,500 in the following two years. However, in 2022 and 2023, the number of tags issued surged to 6,300.

The low fares and oversaturated market, triggered by regulatory changes, sparked protests from hundreds of cab drivers, who warned that the market had become unsustainable. In February 2024, hundreds of cab drivers took to the streets.

The Light Passenger Operators Association (LPOA) had said: “An independent operator puts forth time, energy, and financial investment in order to operate in the industry, and this is being undermined by predatory pricing based on an unsustainable business model, which is affecting the livelihood of the operator.”

 

Government attempts to fix its own mess

After years of inactivity, in October 2023, Transport Malta introduced new regulations to clamp down on operators bypassing garaging rules.

The key changes were aimed at operators with five or more vehicles in their fleet, requiring them to garage their vehicles in a public service garage (commercial garage). Operators were given 12 months to comply with the new regulations, later extended by another six months, with the final deadline set for April 2025.

Meanwhile, the government sought to address concerns about the oversaturation of the cab sector. In July 2024, Prime Minister Robert Abela said that the market required no new foreign workers and promised that TCNs applying to work as cab drivers would have their work permits refused.

Despite his promise, over 300 foreign drivers were introduced into the sector in the months following his statement. Industry insiders explained that while the government's decision to reject new foreign workers' applications was intended for cab drivers, it did not account for the 100,000 foreigners already residing in Malta.

 

‘Retaliatory price hike’

Interestingly, just days after Robert Abela’s promise, Malta’s largest ride-hailing app, Bolt, raised its prices due to a "low supply of cabs." This prompted a strong response from the LPOA, who accused Bolt of retaliating against the government’s attempts to regulate the abused market.

The LPOA’s president, Aron Gatt, welcomed the decision to regulate a sector he described as "built on modern-day exploitation, characterised by artificially low prices and abusive business practices." Gatt, a cab driver for nearly a decade, pointed out that the shift from self-employed operators earning a decent income to a market dominated by large fleets exploiting foreign workers had kept prices low through exploitation.

After the price hike in the summer, fares stabilised, and cab prices began to decrease.

 

The clampdown

At the beginning of 2025, Transport Malta began cracking down on cab operators who ignored regulations requiring them to park their vehicles in PSGs. Despite the one-year grace period, a number of operators still lacked the necessary garage space. As a result, Transport Malta extended the deadline to the end of 2024, and operators were required to submit a planning application showing that they had applied for a PSG. Those who were still in the process were informed they must have an approved permit by 18 April 2025.

On 7 January 2025, Transport Malta suspended the licences of 69 operators for failing to submit the required planning applications. Despite the enforcement measures, backed by a PR campaign showing footage of authorities towing cabs, many operators appealed the revocation of their licences in court.

As a result, over 90% of operators who were subject to enforcement now have their fleets back on the streets.

A number of operators and industry insiders, speaking to MaltaToday, blamed years of inaction by Transport Malta for the state of the cab sector, with government sources agreeing that the industry had been “a jungle” for years.

For now, the future of Malta’s cab-hailing sector remains in limbo, with its fate likely to be determined by the courts.