The Straits Times says

No surging towards dynamic pricing

The surge of interest in dynamic pricing among taxi operators is a natural response to the growing competition from private-hire cars. Transport network companies based on technology, like Uber and Grab, have changed the game by taking cheaper fares during off-peak hours and higher fares when demand exceeds supply, for example during the rush hour. Established players feel disruptors are eating their lunch, while commuters are happy there are more choices on the menu.

The reason competitors appear on the transport scene is simply that supply cannot match demand at certain times and locations. Ride-hailing apps, however, neatly solve that perennial issue by matching users and drivers efficiently. Consequently, one shouldn't take hasty action to deter innovation. Some senators in the Philippines, however, want to ban dynamic pricing or cap it because of overcharging during peak periods and the holiday season. Exorbitant pricing has been reported elsewhere too, notably during emergencies - like the hostage crisis in Sydney and Hurricane Sandy in New York City.

Cab operators who believe two can play at that game and regulators must think through the implications of a laissez-faire approach. Dynamic pricing was indeed the model of the pirate taxis of old and tourists once complained about price gouging. Touting by unlicensed mini-bus drivers is still regarded as a sufficient social evil to warrant up to three months' jail for such activities. Fixed fares were deemed the antidote but, when deregulated, these became partly dynamic and confusing.

New forms of pricing should not be suppressed but, given public sensitivity to prices, one should balance carefully the interests of all stakeholders. Users want affordable and easily hailed rides, both during peak hours and when needs arise unexpectedly, for example, when trains break down. Drivers ought to be able to earn a decent living while providing convenient, safe and comfortable rides to the general public. And transport operators are not wrong to ask for a level playing field. When working out the rules of the game, one must also consider the need for caps, transparency and non-discrimination.

New players are welcome but the authorities should not lose sight of the primacy of public transport in the scheme of things. In urban settings, optimal and environment-friendly results are achieved when efficient networks are developed, rather than a maze of ever-widening roads that fuel a desire for car ownership and usage. The quest for a "car-lite Singapore" will be undermined if private-hire cars and taxis, propelled by dynamic pricing, mushroom everywhere. As reported recently in New York, their ubiquitous presence could give rise to the unintended consequence of reducing the use of trains and adding instead to congestion on the roads.

A version of this article appeared in the print edition of The Straits Times on March 14, 2017, with the headline 'No surging towards dynamic pricing'. Print Edition | Subscribe