Taxi drivers get a chance to earn a little more with surging

By Guest Writer / March 27, 2017

The Transport regulators of Singapore have planned to introduce the surge pricing system in the taxi industry similar to the ridesharing companies.

New regulation for taxi industry

The two regulatory body of Singapore has allowed the traditional taxi services to adapt to the surge pricing strategy that allows the taxi industry to increase the ride fare based on the demand of the rides during the busiest hours of the day, holiday and festive seasons or during natural calamities like cyclone, storm, earthquake or other things.

The officials from the taxi industry meet with the PTC and LTA, the 2 major governing bodies of the nation and request for the proposal to implement the surge pricing in the taxi industry and were given positive response by the regulators. The 4 taxi firms Premier, HDT Singapore Taxi, SMRT and Trans-Cab will partner with the leading ridesharing company in the Southeast Asian countries, Grab. The ride hailing company will help the taxi operators with the new pricing strategy.

Under the Ministry of Transport of Singapore there is an independent statutory board, the Public Transportation Council that was established by the PTC Act in August 14th, 1987 and it regulates the service standards and fares in the transit network and public bus. The PTC is an authorized association that issues and amends the license for the bus service and advices the MoT (Ministry of Transport) in places like imposing the penalties, and non complying the licenses. The main factor of establishing the PTC is to integrate and develop the public transportation services and taking care of the quality of service by surveying the suitable fare for the public.

While the Land Transport Authority is also a statutory board under the Ministry of Transport of Government of Singapore that is responsible for the changes that takes place in the public transportation system including the rails, buses and road projects.

It’s ‘YES’ for the taxi industry

The taxi operators informed the regulatory authorities regarding the surge pricing system will be introduced to the riders as an additional option to that present meter system. The taxi services will also be booked using the phone bookings via the app booking service of the ridesharing service GrabTaxi, apart from the street hail pickups.

However, ComfortDelGro- the largest taxi operator in Singapore is not teaming up with other taxi operators in the idea of surging. Instead the taxi company is planning to implement flat fare system that is similar to the meter fares for the taxi rides that are booking through the mobile app. The spokesperson of the taxi company said that the new option will be introduced within 2 or 3 weeks.

The ComfortDelGro is an MNC transportation company that is present on the Singapore Exchange list and it operates in seven countries including its parent company in Singapore. This company was established in March 2003 when the major 2 Singaporean land transportation companies DelGro Corporation and Comfort Group merged together. The CityCab and Comfort are 2 taxi companies that belong to this company. They are the largest player in the taxi service that has altogether sixteen thousand six hundred taxicabs. The booking system of the company is wirelessly connects the taxis using the GPRS technology using the data terminals of the mobile phones.

Not a happy sign from commuter’s end

The sudden increase in the cab fare depending on the demand and needs is called the surge pricing and it is one of the systems that are disliked by the riders hailing the ridesharing cabs. There was an incident that took place on July 2015 when the MRT lines- the North- South and the East- West lines had a major breakdown that lasted for three and a half hours. And at that time the American ridesharing giant implemented the surging system that was 5 times higher than the regular fare, and became the major outcry of the commuters and within one hour Uber adjusted the fare by removing the surge price.

But, now all the other taxi operators are going to implement the surge pricing mechanism with the help of the Grab ridesharing service. Yet, the riders will not be aware of the upfront fares at the time of booking the cab using the mobile app.

The drivers will be very happy during the surge period because of high demand for taxi service and helps them to earn more money than the normal times, but the reverse situation takes place while the surge pricing ends. Because only some of the drivers will be able to get pick up rides while the others will have no bookings or ride request. And by adapting the surge pricing in their service, there is a chance for the taxi industry to lose its standards among the traditional taxi riders. Because, earlier the riders had the option to hail on the taxis when the ridesharing services like Grab and Uber adapt the surge pricing strategy, but if the taxi service adapts the same system then there are no hope taxi operators to expect riders.

The surge economy

The surge pricing is a pricing strategy that is followed in the businesses to set up a flexible pricing for the goods and services depending on the demands of the market. The on demand services follow this pricing method based on the demand, supply, competitors pricing and other factors present in the business market. Depending on the demand and need of a particular product and service, each business follows different strategies, and this type of pricing is followed in several industries like the ridesharing, hospitality, entertainment, retail and travel services.

The surge pricing is also called the time based pricing, dynamic pricing or demand pricing. The ridesharing companies are the most common services that make of the surge pricing strategy. Whenever there is high demand for the cab service, the companies increase the ride fare so that those who are of high demand get a ride. The surge pricing is based on the location of the rider’s pickup place, for example, the rider may not be in the area where there is surge but the driver will receive the booking request while they are in the surge location. Therefore the rider rides in the regular fare. However, when they receive request from a surge location, the driver’s request display screen will show the surge multiplier.

Experts said necessary

Regarding the proposal of the surge pricing, one of the experts Dr Walter Theseira said that the Singaporeans thing of the taxicab service as an extension of the country’s public transportation system whereas this is not the way in which the taxi industry works in the other countries. Theseira is a senior lecture at Singapore University of Social Sciences’ School of Business. In many different cities, people have expensive transportation services and so the taxi is occasionally used, but in Singapore the taxicab service is the predominant service used by all the people. And the main reason is that the cars are expensive in the country.

This new surging strategy is leading to the premium direction and is necessary because the cheap taxi service were able to sustain in the past because of the cheaper driver wages. According to the senior lecture, he expects that the driver class should also earn a decent amount, therefore the raise in the taxi fares should be an acceptable factor.

The real scenario of the taxi service in Singapore will be known only when the surge pricing is included in the taxi service and how the people feel using the taxi service with the new mechanism.

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