Will Grab be fair to users? Inquirer

Given the heavy traffic congestion in Metro Manila, Grab can always charge higher rates, or the so-called "fare surge" with no competitor around to give commuters a choice.
Given the heavy traffic congestion in Metro Manila, Grab can always charge higher rates, or the so-called "fare surge" with no competitor around to give commuters a choice.PHOTO: AFP

In its editorial, the paper says the country's land transportation regulatory body will have a big role to play in protecting consumer interests as Grab heads towards becoming a virtual monopoly.

MANILA (PHILIPPINE DAILY INQUIRER/ASIA NEWS NETWORK) - Commuters were shocked by the news that Grab had acquired rival Uber's business, resulting in a virtual monopoly in the ride-sharing service industry in the Philippines.

Singapore-based Grab, Southeast Asia's biggest ride-sharing company, announced last week that it had bought Uber's business in the Philippines, Cambodia, Indonesia, Malaysia, Myanmar, Singapore, Thailand and Vietnam.

Uber's service in Southeast Asia will be available only until April 8, as drivers transition to Grab's platform.

Grab had promised that with a larger fleet of drivers on its platform, passenger transportation needs would be met faster and passengers would get "to enjoy shorter waiting times, more convenient and affordable rides through one platform."

The Land Transportation, Franchising and Regulatory Board (LTFRB) has also promised to protect commuters, and tried to allay their concerns on possible higher fares given that Grab will become a monopoly.

But the riding public has many reasons to worry.

Grab's claim of a bigger fleet seems to run counter to the fact that the LTFRB had put a cap of 75,000 cars for the supply of transport network vehicle services for Metro Manila, 1,500 units for Cebu, and 250 for Pampanga.

LTFRB board member Aileen Lizada had admitted that the cap would be enough to serve around 75 per cent of the existing demand, which means there still won't be enough ride-sharing vehicles on the road.

The claim of shorter waiting times is also disputable. Lizada had noted that passengers should ideally wait just two to three minutes for their ride.

But between Uber and Grab, commuters have complained of the latter's drivers canceling bookings because they know the destination of the person getting a booking, unlike the former wherein the driver finds out the destination only when he or she starts the trip - that is, once the passenger boards the vehicle.

In short, there are Grab drivers who will cancel a booking when they learn that the destination is far, or they anticipate heavy traffic congestion.

Another possible problem area is fare surge. With no competitor, Grab will be in a position to set fares using what it calls "a dynamic pricing scheme based on various factors such as traffic, rider and driver profile, time of day and number of active drivers at a particular time."

Given the heavy traffic congestion in Metro Manila, Grab can always charge higher rates, or the so-called "fare surge" with no competitor around to give commuters a choice.

This is where the LTFRB should come in and protect commuters. The regulating agency has promised to continue monitoring the compliance of the transport network company (TNC) with its fare structure.

This promise comes after the LTFRB sat for years on applications for new TNC permits despite the public clamor for more ride-sharing vehicles to meet a surging demand.

The LTFRB needs to step up in this area of protecting commuters from unreasonable fare surges by allowing supply to catch up with demand.

Legislators are also worried. Senator Sherwin Gatchalian commented that the buyout was not favourable to commuters who would have less ride-sharing choices (no more choice, actually).

He has called on the Philippine Competition Commission to monitor any anticompetitive practices that might result from the development.

The LTFRB is working on a unified fare structure for TNCs, and Grab has raised concern that a single rate would defeat the purpose of making use of technology in making the booking and paying for efficient rides. It suggested a price range to consider traffic conditions and demand.

The problem here is that a very big fare range will put commuters at a disadvantage, especially now that Grab will become a virtual monopoly in the ride-sharing business.

The LTFRB has to limit fares to the narrowest possible range. One other solution to avoid the perils of a monopoly lies with the regulating agency, and that is to act quickly on the applications of three other ride-sharing companies seeking accreditation.

The Philippine Daily Inquirer is a member of The Straits Times media partner Asia News Network, an alliance of 23 news media.