SINGAPORE: Ride-hailing app provider Grab has combined its fleet of private-hire drivers and taxi drivers for a new dynamic fare pricing service - JustGrab - days after the transport authorities gave dynamic pricing for taxis the green light.
This means that commuters who book a trip through JustGrab will either be picked up by a GrabCar driver, or a taxi driver from one of Grab’s five taxi company partners - Premier, Prime, Trans-cab, HDT and SMRT.
The service involves upfront fares whereby commuters who book a ride through the app will know how much a ride costs before a journey begins.
With dynamic pricing, the cost of a taxi trip booked through a mobile app will vary according to demand. This means that commuters will pay more during peak hours and high-demand periods, and pay less when demand is low.
About 10,700 taxis will be added to Grab's GrabCar fleet. In all, the company has more than 100,000 drivers across its platforms GrabCar, GrabTaxi, and GrabHitch.
However GrabTaxi Singapore head Melvin Vu said the increased supply of rides means JustGrab fares “will not fluctuate so much”.
"We don't want to put hard numbers on it," Mr Vu told Channel NewsAsia. "We did our modelling and our data, and we found that JustGrab on average will be cheaper than a GrabCar ride, simply because we are pooling two different fleets together."
But Mr Vu acknowledged that this is “on average”, and in times of inclement weather or big events, the fares might go up.
Mr Vu said that the GrabTaxi and GrabCar options will remain.
"I think metered fares are are here to stay, it provides that familiarity with a lot of Singapore commuters,” he said. “We are still keeping GrabCar because our data shows that we still have a pool of commuters who prefer only car rides, and because for JustGrab there's a chance you may get both cars or taxis. So we're keeping both for now.”
“It's a request from LTA and the PTC to keep metered fare available for those people who are still used to metered fare,” he added.
Critics of dynamic pricing for taxis have said that the move hurts street-hailing passengers, or those that take a taxi from a taxi stand, as drivers will be drawn to the surge prices that come about during peak hours.
But Mr Vu disagreed.
"On the ground when we talk to various taxi drivers, they feel that if they get a surge or a high fare job in the morning during peak period, that's good,” he said. “If not, they will still want to pick up the nearest passenger that they see. It gives them certainty of income.
"Of course there may be instances or a group of taxi drivers who decide to cruise around empty and just wait for the high fare, but generally, the majority of taxi drivers we speak to say they'll pick the nearest job, whether it's from your Grab app or street hail."
Pricing expert, Dr Jochen Krauss, said dynamic fares would help “increase the efficiency of the taxi system in Singapore". “It makes sure that at every point in time, the demand that exists is matched with the appropriate supply,” he said.
Dr Krauss, who is a partner at marketing consultancy Simon-Kucher and Partners, said fears that cab fares will soar as a result of dynamic pricing are likely to be unfounded.
“They will not come true because if nobody picks up, if everybody says 'Well, these prices are too high', then the surge price mechanism has to lower its prices, there is simply no demand,” he told Channel NewsAsia. “So in many ways, this is a self-adjusting mechanism.”
“I believe by introducing more options, we would see an increased level of competition among the players that we have in Singapore,”Dr Krauss added. “So I think this is a step in the right direction to create choice, to create alternatives to different segments of the market.”
Besides the new service, Grab announced on Wednesday that all its GrabTaxi drivers would receive a monthly 8 per cent MediSave contribution, based on their earned incentives. Drivers in the company’s Platinum and Platinum Plus categories - tiers determined by driver performance, mileage and ratings - would get a 10 and 15 per cent contribution, respectively.
Mr Vu said there was “no cap” to this investment for the company.
“We have not exactly looked at the cost. But there's no cap. So that means if you are a very productive driver and earn the maximum incentives that we give every week, you will get the maximum tier of MediSave or quarterly bonus you are entitled to,” he said.
Currently, every taxi company in Singapore is on the JustGrab service except for the largest operator ComfortDelGro.
Speaking to Channel NewsAsia last Friday, the company said it would introduce a flat fare structure similar to its taxi metered fares for trips booked via mobile applications. It said the new system would be rolled out within the next two to three weeks.