Trans-Cab, Premier Taxi plan to implement surge pricing

The new fares will apply only to commuters getting a cab via the Grab ride-hailing app. They will vary according to real-time demand - lower than the current structured taxi fares during off-peak hours but possibly much costlier when demand surges.
The new fares will apply only to commuters getting a cab via the Grab ride-hailing app. They will vary according to real-time demand - lower than the current structured taxi fares during off-peak hours but possibly much costlier when demand surges.ST PHOTO: LIM YAOHUI

Trans-Cab, Premier Taxi plan to charge fares according to demand; Prime is considering this model too

Some taxi fares could soon fluctuate according to actual demand for the cabs.

Two taxi operators are planning to implement dynamic fares, popularly known as surge pricing, with a third looking to join the fray.

Trans-Cab, Singapore's second largest operator with 4,566 taxis, and Premier Taxi, the second-smallest with 1,889 cabs, said they have informed the Public Transport Council (PTC) of their plans. Prime, the smallest operator with 731 cabs, is considering implementing the controversial fare system too.

Though taxi fares are not regulated here, operators are required to keep the PTC posted of all changes before they are rolled out. The operators are awaiting PTC's response.

The new fares will apply only to commuters hailing a cab via the Grab ride-hailing app. Meanwhile, ComfortDelGro and SMRT Taxis have not indicated that they want to join the latest initiative.

PROS AND CONS

On the one hand, it's a good idea to have better responsiveness. But the risk is that it'll be next to impossible to get a street hail.

SIM UNIVERSITY ECONOMIST WALTER THESEIRA, on surge pricing.

Dynamic fares vary according to real-time demand - lower than the current structured taxi fares during off-peak hours but possibly much costlier when demand surges.

During major rail breakdowns, commuters have complained of Uber fares exceeding $140 - four to five times that of a usual taxi fare.

But proponents of dynamic fares point out that in cases of high demand, the supply of taxis under the current pricing plan is inadequate.

Premier Taxi managing director Lim Chong Boo said: "During the peak, there won't be enough taxis even if we doubled the fleet."

He added that dynamic pricing "is a Grab initiative, and as a business partner, we're supporting it".

He said the new format will give commuters another way to secure a cab. "It will also allow taxi drivers some levelling of the playing field," noted Mr Lim, referring to cabbies complaining that they were losing business to private-hire drivers because of the rigid fare surcharge system taxis have to adhere to.

Trans-Cab managing director Teo Kiang Ang said he is keen to roll out dynamic pricing, "but the PTC asked us to hold on".

Asked why the council's approval had to be sought since taxi fares have been deregulated since 1998, a PTC spokesman would only say: "PTC and Land Transport Authority will jointly review the applications."

Observers reckon that the Government is waiting for market leader ComfortDelGro - which controls more than 60 per cent of taxis here - to make a move before deciding.

Two weeks ago, ComfortDelGro's chief executive of taxi business Yang Ban Seng said: "We would love to do surge pricing but I don't think we are allowed to."

Assistant Professor Yang Nan of the National University of Singapore Business School's strategy and policy department said taxi companies may actually lose some competitive advantage, as "people prefer conventional cabs because there is more certainty in their fares".

"If everything is too similar, it'll boil down to price competition. And the taxi companies don't have the advantage of these other players," he added, noting that the latter "have deep pockets and money to burn, and they can press down fares".

SIM University economist Walter Theseira said: "On the one hand, it's a good idea to have better responsiveness. But the risk is that it'll be next to impossible to get a street hail. This may be a transitional concern, though.

"If people move entirely over to getting a taxi via an app, then it won't be a concern any more."

Grab would not comment when contacted yesterday.

A version of this article appeared in the print edition of The Straits Times on March 01, 2017, with the headline '2 taxi firms plan to Grab hold of more customers'. Print Edition | Subscribe