Green light to dynamic pricing system for taxi companies

Photo: SMRT

Taxi dynamic pricing in the form of flat fares for trips booked via mobile applications proposed by taxi companies and Grab has been given a green light by the Land Transport Authority (LTA) and the Public Transport Council (PTC).

LTA and PTC said in a joint statement on Friday (17 Mar) they have no objections to the proposals on the new fare system, which also called surge pricing. This will be introduced as an additional option for commuters to book a taxi, on top of the current metered fare taxi bookings.

The pricing system, which is available in the Grab ride-hailing app, quotes a flat fare when customers book a taxi via the app, which they can choose to accept or reject.

On Friday, SMRT also announced a partnership with Grab to introduce the dynamic pricing system.

The company with more than 3,400 taxis informed, “The dynamic fixed fare scheme.. lets customers know the fare for their intended trip before the start of the journey. Dynamic fixed fares are displayed upfront, and already accounts for travel time, distance, booking fees, and real-time demand and supply for taxis.”

Melvin Vu, Head of GrabTaxi Singapore said, “The current taxi fare model does not account for real-time passenger demand and driver supply, which often means that passengers pay a surcharge even when there are many available taxis within the vicinity.”

“Dynamic fixed fares ensure that taxis are better utilised throughout the day and passengers enjoy more affordable rides based on real-time market demands, while not eliminating metered fares,” he said.

Last week in Parliament Second Minister for Transport Ng Chee Meng said that the taxi industry should be allowed to innovate and adapt to new market conditions and competition.

“Our taxi drivers have to make a living, and we should not restrict their ability to compete effectively.” Mr Ng said.

“On the other hand, I understand some commuters’ concerns about dynamic pricing. Fares indeed will likely vary according to demand and supply, sometimes higher, sometimes lower, depending on peak hours or low-peak periods.”

“But importantly, before any journey begins, commuters will know exactly how much their fare would be. They can then choose to accept or decline the offer. For commuters who prefer more familiarity, they will have the traditional option to book a taxi,” Mr Ng said.

The Second Minister was responding to Mr Zaqy Mohamed (Chua Chu Kang GRC) and Ms Cheng Li Hui (Tampines GRC) expressed concern about dynamic pricing.

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