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Five taxi firms to roll out dynamic pricing next week

SINGAPORE — Following approval granted by the authorities last week, five taxi operators — SMRT Taxis, Prime Taxi, Premier Taxis, Trans-Cab and HDT Singapore Taxi — will implement dynamic pricing from next Wednesday for trips booked through the Grab mobile application, under a collaboration between the operators and the ride-hailing company.

Head of Grab Taxi Melvin Vu said with a measured approach, prices of rides will be cheaper and fluctuate less. Photo: Wee Teck Hian

Head of Grab Taxi Melvin Vu said with a measured approach, prices of rides will be cheaper and fluctuate less. Photo: Wee Teck Hian

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SINGAPORE — Following approval granted by the authorities last week, five taxi operators — SMRT Taxis, Prime Taxi, Premier Taxis, Trans-Cab and HDT Singapore Taxi — will implement dynamic pricing from next Wednesday for trips booked through the Grab mobile application, under a collaboration between the operators and the ride-hailing company.

The new JustGrab service will be trialled from today among Grab employees and commuters on its rewards programme, using cabs from SMRT Taxis, Trans-Cab, HDT Singapore Taxi, as well as private-hire cars.

Announcing the roll-out date yesterday, GrabTaxi Singapore head Melvin Vu also sought to allay fears that dynamic pricing — or surge pricing — would not only lead to higher taxi booking fares during periods of high demand, but also the likelihood of cabs ignoring street commuters during peak hours.

The fare system for JustGrab will be similar to the system for Grab’s private-hire car service GrabCar, which charges a fixed fare, subject to dynamic pricing. Grab said that based on data from January and last month, average fares for GrabCar, in some instances, were a few dollars cheaper than fares for its GrabTaxi service, which uses a metered fare system.

Given the larger supply of vehicles under the new JustGrab service, the company said it expects fares to be even lower (at least a dollar cheaper than fares for GrabCar).

Speaking to TODAY, Mr Vu reiterated that a “measured and calibrated” approach would be taken for dynamic pricing, and with a “huge supply pool” right from the start, “prices will be cheaper and fluctuate less”.

Grab declined to reveal the number of taxi drivers who will be part of the new service. Nevertheless, the five operators have a combined fleet size of around 10,700 vehicles.

Grab said that fares for JustGrab will range between S$4 and S$100, depending on travel time, distance, booking fees, and real-time demand and supply for taxis. Based on last year’s figures, only 1 per cent of private-hire car rides were over S$60, and of these, only one trip on New Year’s Eve crossed the S$100 mark, Grab said in response to TODAY’s queries.

The new service will also do away with current taxi surcharges, which apply to midnight fares or rides in the Central Business District. Trip prices will be reflected on the booking screen, although these do not include Electronic Road Pricing charges.

Based on past data, for instance, a trip between Tampines to Choa Chu Kang during peak hours would cost an average of S$29 for a metered taxi and S$25 for a fixed fare private-hire car. During off-peak hours, metered taxi fares could fall to S$26, whereas private-hire car rides could dip to S$24.

JustGrab will provide commuters with an added option: Those who wish to take metered taxis can continue to hire them through the Standard Taxi icon on Grab’s app. Likewise, commuters who wish to book a private-hire car can still do so via the GrabCar icon.

On concerns that surge pricing could result in cabbies shunning passengers on the streets, Mr Vu acknowledged that while this may happen for a “handful” of taxi drivers, the majority of cabbies have told him that it is “not economical” to cruise without any passengers in the hope of getting higher fares through bookings.

He added that taxi drivers have also told him that they prefer picking passengers off the streets to accepting a call booking.

“Because it’s a confirmed job. Because they put a bum on the seat of the taxi faster and they cruise less,” he said. Grab would be taking a cut of 10 per cent for each JustGrab ride. In comparison, it charges a 50-cent commission for each metered taxi fare booking now.

Last week, Singapore’s biggest taxi operator ComfortDelGro, with close to 17,000 cabs under its Comfort and CityCab brands, said it will strike out on its own with a flat-fare structure similar to metered taxi fares for trips booked via its in-house mobile application. Based on the timeline provided earlier by ComfortDelgro, this could be rolled out around the same time as JustGrab’s launch. Mr Vu said the “devil was in the details” of the rival service.

“I don’t know how they will match demand and supply effectively. We’ve been doing this for three years and we’re a firm believer in matching accurately — at the time of booking — demand and supply,” he said. Grab claims that it expects rides to increase by a fifth for taxi and private-hire car drivers who use JustGrab.

Meanwhile, as competition within the industry looks set to intensify, Grab also announced enhanced perks for its taxi drivers, with a monthly 8 per cent Medisave contribution based on their earned incentives. Private-hire car drivers receive higher Medisave contribution rates at 10 to 15 per cent, depending on their performance.

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