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Grab to implement dynamic pricing starting from 29 March

Ride-hailing application provider Grab has announced that it will implement dynamic pricing, JustGrab, starting from next Wednesday (29 March), following approval granted by the transport authorities last week.

The new system will be put on trial starting from today among Grab employees and commuters on its rewards programme.

The move means that commuters who book through JustGrab will be picked by either a GrabCar driver or a taxi driver who have inked partnerships with the provider, which are MRT Taxis, Prime Taxi, Premier Taxis, Trans-Cab and HDT Singapore Taxi.

The system includes upfront fares, where commuters will know how much a ride costs before a journey begins when they book a ride through the application, as well as the vary in cost, where the price is high during peak hours and low when there is less demand.

The system will also make it easier for the taxi driver as commuters are matched to the nearest vehicle available.

Melvin Vu, GrabTaxi Singapore head, eased the concerns that dynamic 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. Dynamic pricing adjusts to real-time market demand, resulting in cheaper fares at low demand periods. By uniting fixed fare taxis and cars as one, the increased vehicle supply means JustGrab fares will fluctuate less and be more affordable throughout the day.

He 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.

Therefore, he said that the company expects fares to be cheaper as there is a larger supply of vehicles, more than 100,000 drivers in all, adding that JustGrab fares “will not fluctuate so much”.

Mr Melvin told Channel News Asia that the company do not want to put hard numbers on it, adding that they did modelling and data.

“We found that JustGrab on average will be cheaper than a GrabCar ride, simply because we are pooling two different fleets together,” he said, noting that the company acknowledge that in times of inclement weather or big events, the fares might go up.

He then said that the GrabTaxi and GrabCar options will remain as it provides that familiarity with a lot of Singapore commuters, saying, “I think metered fares are here to stay.”

He told the media that the company is still keeping GrabCar because data shows that it 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, adding that it is also a request from LTA and the PTC to keep metered fare available for people who are still used to metered fare.

Many commuters pointed at the possibility that the drivers will just ignore commuters who take a taxi from a taxi stand, as drivers will be drawn to the surge prices that come about during peak hours.

Mr Melvin rebutted this statement, saying, “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 the peak period, that’s good. If not, they will still want to pick up the nearest passenger that they see. It gives them the certainty of income.”

He then added that there may be instances or a group of taxi drivers who decide to cruise around empty and just wait for the high fare.

However, generally, the majority of taxi drivers say that they will pick the nearest job, whether it’s from Grab application or street hail.

Correction note: This article has been updated to reflect the reasoning behind the dynamic pricing.