SINGAPORE - Ride-hailing firm Grab will raise its fares by $1 starting next month to improve driver earnings amid rising fuel and maintenance costs, it said.
With taxi and private-hire car ridership at just 55 per cent of pre-pandemic levels as a result of the Covid-19 phase two (heightened alert) measures, Grab said it will not collect commission on the additional $1 from June 1 to June 30.
This means drivers will get $1 more for every ride they complete with Grab for a month.
To help commuters adjust to the new fares and defray the added costs, Grab said it will offer $1 vouchers for peak-hour rides from June 1 to June 14.
Each Grab commuter will get two vouchers per day, and can use them on weekdays from 7am to 9am and 5pm to 7pm, as well as on weekends from 11am to 6pm.
There is a limit on the total number of vouchers that can be claimed.
Grab said that with this fare hike and its other support measures, an average driver could recover up to 50 per cent of earnings lost due to the current Covid-19 restrictions. This is not including any additional income from deliveries.
This is the first time the firm is raising its base fare since 2017.
The hike will apply to all of Grab's transport services, except for its standard taxi booking service, its carpooling service GrabHitch and its GrabCoach service, Grab Singapore's managing director for transport Andrew Chan said in a message to drivers on Tuesday morning (May 25).
Grab began charging a platform fee of 30 cents for rides booked through it in December last year. This came after the competition watchdog - the Competition and Consumer Commission of Singapore (CCCS) - lifted restrictions on it in November.
Grab said the latest fare hike comes after "deep discussions" with its drivers and tripartite partners, who gave feedback that the fares have not kept up with the cost of providing transport services on the firm's platform.
Mr Chan said that discussions about Grab's fare structure have been going on for many years, even when the firm's hands were tied due to the CCCS restrictions that were imposed in the wake of its merger with rival Uber in 2018.
"The pandemic situation as we see today is volatile and we know we cannot wait any longer," he said in his message to drivers.
"We believe this will help improve your earnings while balancing the price passengers are willing to pay."
Besides the fare hike, Grab on Tuesday also rolled out a suite of support measures for drivers to help them cope with the tightened restrictions.
This includes additional incentives for Grab drivers who complete delivery jobs in designated high-demand areas and fixed-value cash rebates based on the total number of transport and delivery jobs that drivers complete during pre-designated hours.
Eligible drivers who rent their vehicles from Grab's vehicle rental arm, GrabRentals, will also receive a rental rebate of up to $45 per week.
Grab said: "Phase two (heightened alert) and last year's circuit breaker have taken place amid the backdrop of increasing costs for operating and maintaining a vehicle - including fuel, maintenance and repair costs - while fares on the Grab platform have remained constant since 2017. Collectively, these factors have a significant impact on drivers' take-home earnings.
"The initiatives under this holistic programme thus aim to alleviate driver-partners' immediate financial strain and improve their overall earnings for longer-term viability."
Six of Grab's fleet partners - Lion City Rentals, Auto Exchange Leasing, KH Leasing, MS Carz Leasing, Prime Transport and Limousine Services and Roset Limousine Services - will also offer rental rebates to hirers.
Last week, other operators rolled out their own measures to support drivers. Gojek adjusted its incentive scheme to make it easier for drivers on its platform to qualify for service fee rebates, while ComfortDelGro, Singapore's largest taxi operator, raised its daily rental waiver to 50 per cent per vehicle, up from 20 per cent.
Other taxi operators have also committed to providing additional rental discounts of at least $5 a day. In all, taxi operators have pledged around $28 million in additional rental discounts.
Private-hire and taxi drivers will also receive additional cash support of $10 a day for the period of May 16 till the end of June, with the Government setting aside an additional $27 million to support them during this period.
Singapore University of Social Sciences transport economist Walter Theseira said a fare hike was inevitable.
"We are overdue for such a fare hike because costs have changed in the last few years but no operator was willing to change fares because of the significant disruption in the market caused by the entry of ride-hailing firms," he said. "The ones who tend to suffer are the drivers, who will see their earnings get eroded steadily each year unless fares are adjusted."
The pandemic has also exacerbated the situation as utilisation of taxis and private-hire cars is low, and drivers can no longer rely on surge pricing.
With Grab raising its fares, all eyes will be on how its biggest rivals Gojek and ComfortDelGro react. Associate Professor Theseira said: "In this market, the dynamic is that the leader changes fares and the rest decide whether they follow. I don't think the dust has settled just yet."
ComfortDelGro's group chief branding and communications officer Tammy Tan said her firm will not be adjusting its metered fares or base fares any time soon as demand has not yet returned to pre-Covid-19 levels.
Gojek, which added a 70-cent platform fee to its bookings in March last year, declined to comment.
A spokesman for the Public Transport Council (PTC) said it was informed of Grab's plans to raise fares. She said the PTC's focus is to ensure fares are transparent and clearly communicated, and it has reminded Grab to do so.
Meanwhile, Grab's impending fare hike has sparked some backlash among commuters and drivers alike. Some drivers said the increased fare would not make much difference given the low ridership now, and Grab should instead reduce its commission fee.
There are also fears that commuters will switch to other ride-hailing platforms, reducing ridership even further.
But for some drivers like Mr Joseph Goh, 55, every dollar counts. While he was unsure whether the fare hike would work out well, Mr Goh said the cost of fuel has risen considerably, and his operating costs have gone up by about 70 per cent over his five years as a private-hire car driver.
He said: "Any increase in earnings is good during this pandemic."