E-hailing fare surge due to fewer drivers and sharp increase in demand: Grab Malaysia

KUALA LUMPUR: Grab Malaysia has denied claims that they have made changes to their fare structure, amid complaints of a surge in pricing from users of the ride-hailing application.

They said the price fluctuations seen by their users was a result of fewer drivers on the road to accept a sharp increase in ride demand from their passengers.

 “Grab adopts a dynamic pricing model to ensure our passengers get a ride when they need one and our driver-partners are compensated fairly for their time and effort.

“When there are more people booking a ride than the number of drivers available in an area, fares will ‘surge’ or go up to encourage more drivers to head to where passengers are,” they said in a statement on Tuesday (May 24).

They added that as of mid-May this year, the number of driver-partners on their platform was less than 70% of what it was pre-pandemic.

Grab Malaysia also said that the fluctuations in supply and demand were driven by several factors including a shift to the endemic phase.

“In the past two years, many driver-partners have become inactive on our platform due to COVID concerns and corresponding lack of demand for rides. 

Meanwhile, with the recent lifting of Covid measures, we have observed a quick rise in ride bookings on our platform. This was boosted further by the recent festive periods,” it said.

According to Grab Malaysia, the barriers to entry result in a slower response time for new drivers to be onboarded to meet the sharp increase in demand while a large increase in traffic congestion has also been observed.

“While we strive to bring more driver-partners on board, there is a mismatch as the increase in demand for rides is outpacing the growth in the number of drivers,” the statement said. 

It added that they were committed to providing affordable rides in the long term but would endeavour to meet all demand in the short term.

Grab Malaysia said that they have implemented several steps to increase the supply of drivers including increasing incentives for drivers to get back on the road during peak hours, subsidising up to 100% of regulatory compliance costs and offering referral bonuses of up to RM300 to existing drivers to refer and help onboard new drivers.

They would also offer bonuses of up to RM1,000 to any Malaysians who joined them as a driver and that they would assist new drivers to navigate through various regulatory processes.

The e-hailing company also suggested to their passengers to plan their trip and book earlier than usual. 

They can  also set a “fare alert notification” feature in their Grab app, which will notify them if the fare drops within the next 15 minutes. 

DEMAND INCREASE AFTER TRANSITION TO ENDEMIC PHASE: TRANSPORT MINISTER 

Meanwhile, Transport Minister Dr Wee Ka Siong said there were two factors that have led to a surge in e-hailing fares: a supply-and-demand imbalance and high traffic volume leading to longer travel times.

They were also witnessing a sudden increase in the demand for e-hailing services after the country transitioned to the endemic phase on Apr 1, said Dr Wee in a statement on Tuesday. 

He said during the period there were a lot more economic activities compared to the height of the pandemic.

While daily life seems to have returned to some normalcy and expectedly, there were also more traffic congestions as Malaysians were able to move about more freely, he added. 

“These factors have had the most effect on the fare algorithms employed by the e-hailing operators (EHO) which account for many factors including distance, traffic volume, weather patterns, as well as market supply and demand. They all play a part in the increase in fares lately,” he said.

He said that EHOs are permitted to set their fare structures based on their own formula and their terms of service with their consumers in a free market.

The government, on its part, said Dr Wee has continued to ensure that more EHOs along with taxis and buses are available to provide commuters with better last-mile connectivity and more choices.

He said currently there are more than 130,000 individuals who hold vocational licences to work as e-hailing drivers. 

“This group is expected to grow as more driving schools and EHOs receive more candidates to become e-hailing drivers for 21 EHOs with active licences nationwide including the Klang Valley,” he said.