The luxury taxi service Wheely disappeared from the streets of Moscow this month following a court ruling that mandated its removal due to its refusal to share passenger information with security agencies.

Shortly thereafter, St. Petersburg’s authorities implemented a ban on migrant taxi drivers, which is expected to halve the city’s workforce. During this time, Yandex, the country’s top ride-hailing app, cautioned users about impending surge pricing as students returned to their universities.

These events reflect a larger crisis unraveling within Russia’s taxi industry, rather than being isolated occurrences.

Once a vibrant and competitive sector, Russia’s taxi landscape is gravitating towards a state-controlled monopoly characterized by escalating prices, reduced services, and systemic discrimination against foreign workers.

Already, taxi fares have surged by 22% this year compared to the previous year, with certain popular routes seeing increases of up to 70%. Industry projections indicate that prices may rise by an additional 40-60% once new localization requirements for vehicles are enforced in March 2026.

The expulsion of migrant drivers has intensified the ongoing crisis. Following a xenophobic backlash triggered by the March 2024 Crocus City Hall terrorist attack, over 30 regions in Russia have prohibited foreign nationals from driving taxis.

“We’re witnessing a gradual collapse of an entire industry,” remarked Daniil Kurashev, Chief Operating Officer of Citimobil, a prominent taxi service.

Across the country, numerous taxi firms have shut down or are on the verge of doing so, leaving vehicles idle and incurring financial losses.

In Moscow, residents increasingly report waits exceeding an hour for rides or being charged more than their hourly wages for short trips.

Wheely’s closure highlights the Kremlin’s commitment to eradicate any service that opposes government surveillance.

Founded by Anton Chirkunov, the son of former Perm Governor Oleg Chirkunov, Wheely emphasized privacy protection in its service offerings. It catered to Moscow’s elite with high-end Mercedes-Benz vehicles and professional drivers, appealing to diplomats, executives, and wealthy patrons who valued confidentiality.

However, its attempts to comply with European data protection regulations while adhering to Russian security mandates became untenable.

Court documents reveal that Wheely was blocked for not connecting to Moscow’s Unified Regional Navigation Information System (ERNIS), a compliance requirement met by every other major provider. This system mandates the transmission of drivers’ passport details, real-time vehicle tracking, passenger information for each journey, and daily operational reports to security authorities.

“The irony is remarkable,” observed an unnamed industry analyst. “They’re shutting down a service utilized by the affluent in the name of combating terrorism, when these individuals are the least likely to pose a threat. This situation is about control, not security.”

The widespread departure of migrant workers is reshaping Russia’s taxi industry. Estimates reveal that migrants account for 60-70% of economy-class taxi drivers in major urban centers and nearly half of all taxi drivers nationwide, a figure that is expected to decline sharply due to regional bans on foreign drivers.

Authorities assert that these prohibitions seek to combat illegal employment, enhance service quality and safety, and create more jobs for local residents.

Experts argue that these measures are not only discriminatory but economically counterproductive, especially given Russia’s workforce shortage of 2.4 million.

“Not a single study has demonstrated that these bans enhance safety or improve the labor market,” stated demographer Olga Chudnovskikh. “Instead, we’re witnessing the rise of a shadow economy where migrants continue to work under different classifications or in entirely illicit arrangements.”

Ilham, a Tajik driver who invested his savings in a second vehicle to comply with new regulations, now faces deportation.

“I adhered to every regulation, paid all my taxes, and never had a single complaint in five years. Now I’m being told I cannot work because of my passport,” he expressed.

For Central Asian drivers, the crisis extends far beyond employment restrictions, manifesting in frequent harassment and violence. In one video from Moscow this August, a passenger was filmed telling his Uzbek driver, “You are a slave, a slave of Russians.”

“Prior to Crocus, perhaps one in ten passengers would make comments about my accent or appearance,” recounted Rustam, a Tajik driver who worked in St. Petersburg until the migrant ban. “After Crocus, it became every other passenger. Some would cancel rides upon realizing I wasn’t Russian. Others would spend the entire trip telling me to ‘go home’.”

The treatment of Central Asian laborers has strained Russia’s relations with former Soviet republics, which often rely on remittances from their citizens abroad. Uzbekistan has lodged official protests over harassment incidents, while Kyrgyzstan has issued travel warnings regarding increasing discrimination in Russia.

In May, President Vladimir Putin signed legislation mandating that all taxis be manufactured domestically or meet strict local content requirements starting in 2026.

This legislation effectively confines operators to a limited selection of Ladas, Moskvich models, a few locally assembled Russian electric cars, and select Chinese vehicles. This shift will phase out the Korean, Japanese, and European automobiles that currently dominate taxi fleets.

The Russian Government’s Analytical Center warns that over 500,000 drivers might exit the industry rather than invest in more expensive and lower-quality domestic vehicles. Nevertheless, Lada manufacturer AvtoVAZ stands to gain a captive market of 40,000-60,000 vehicles annually from this policy.

“We’re preparing to replace 80% of our fleet within the next few years,” stated Dmitry, who oversees a mid-sized taxi park in Moscow. “A Lada Granta costs double what a used Korean car did, but passengers won’t pay premium prices for economy service. The math simply doesn’t add up.”

While central Russia is expected to comply with the new regulations by 2026, regions in Siberia and the Far East have until 2028 or 2030. These staggered deadlines reflect an unspoken acknowledgment from officials: domestic production is insufficient to meet demand, and enforcing immediate compliance would collapse transportation services in Russia’s remote areas.

Social media users have responded with dark humor, poking fun at potential new service tiers like “Discomfort+” — “a domestic vehicle at an inflated price” — or humorously suggesting that horse-drawn carriages might soon be included as a Yandex taxi option.

With 130,000 unfilled driving positions nationwide, ride-hailing platforms heavily rely on algorithmic surge pricing, which can double or triple fares in mere moments.

Yandex, which commands a 60% share of the Moscow market, exploits its dominance through aggressive pricing algorithms designed to maximize revenue over service availability. The company reported a 43% increase in taxi division revenue for Q2 2025, despite a decrease in trip numbers — evidence, critics argue, of monopolistic power.

“The algorithms are crafted to extract maximum profit, not to serve passengers,” explained Anton Maksimov, a part-time driver who also runs a Telegram channel for taxi drivers. “When multiple requests for rides arise from the same location, fares instantly double or triple. It’s pure greed disguised as technology.”

Simultaneously, securing financing for new vehicles has become nearly unfeasible, with high interest rates leading to a 50% decrease in new taxi registrations this year.

Adhering to data-sharing and certification requirements adds thousands of rubles in monthly costs for each vehicle.

Excessive regulation, migrant bans, and price inflation have contributed to a resurgence of underground taxi networks.

Numerous Telegram groups now facilitate direct connections between riders and drivers, effectively recreating the informal taxi networks that were prevalent in the 1990s. These networks provide fares 30-50% lower than official services while offering drivers greater earnings by removing platform commissions.

“It feels like we’re regressing,” observed Maria, a Moscow resident who often uses these taxi groups. “You message a group, negotiate directly with a driver, and pay cash. No apps, no surveillance, no surges. Just like hailing an illegal taxi in the ’90s, but organized through smartphones.”

Strikes have erupted in smaller towns, with drivers disclosing pay stubs revealing monthly earnings of only 30,000-50,000 rubles ($360-600) after expenses.

Viral videos of drivers denouncing governmental policies frequently gain traction online before being promptly taken down by authorities.

The decline of the taxi industry has transformed into a reflection of modern Russia: a system where control supersedes efficiency, xenophobia trumps economic logic, and monopolies replace competition.

The imagery is stark: empty taxi yards with unmoving vehicles, beleaguered drivers earning poverty wages, passengers who cannot afford basic transport, and underground networks reviving informal economies reminiscent of the Soviet era.

As one popular meme in Moscow put it: “Moscow Never Sleeps—because no one can afford the taxi home.”