Unsettled by the fact that Uber and GrabCar are eating into their business, taxi companies have decided that instead of lowering fares and taking a cut of their own profits, they’re going to copy private car hire services by introducing taxi surge pricing.
The LTA has given taxi operators their approval despite everyone else having their misgivings about this system, and already Grab has announced that taxis booked through the app will soon operate under the surge pricing model, too.
For now, taxis that stop to pick up passengers on the streets will continue to charge metered fares.
How is this going to change the taxi and private car hire landscape and how will passengers will be affected?
It’s going to be harder to flag cabs down
Remember the days when it was almost impossible to flag down a cab at 11:30pm or on a rainy day, before Uber and GrabCar appeared on the scene and gave taxi drivers a run for their money?
With the introduction of surge pricing, we could be seeing a repeat of those unhappy days. Surge pricing is likely to discourage taxi drivers from looking for flag-down customers during peak period, preferring instead to get bookings through the app. It makes sense since they earn more.
For customers, this means travelling during peak hour will now cost more, as pretty much the only reason one would choose a taxi over Uber/GrabCar is to escape surge pricing.
More people are going to switch to Uber and GrabCar
When you travel by taxi or private car hire, you really don’t care if the driver is an uncle who’s been plying the streets for 20 years, or some fresh-faced undergrad driving his parent’s car. You just want to get home for as low a price as possible.
Previously, many opted for Uber and GrabCar whenever it would be cheaper to do so than to take a taxi and pay hefty surcharges, such as after midnight.
However, taking taxis was still cheaper at certain times of day, and when Uber and GrabCar prices got pushed up due to surge pricing.
If taxis lose this price advantage, commuters will no longer have any incentive to call cabs. Grab’s new booking service JustGrab, which will enable passengers to be assigned either taxis or cars depending on which vehicle is closest to them, seeks to keep taxis relevant.
Commuting is going to be more expensive
One thing is for sure, it is the commuters who lose out, as the average cost of commuting by taxi/private car hire is now going to be higher, especially if, as has been predicted, taxis start disappearing from the streets.
As surge pricing can sometimes go insane, it means that commuters who aren’t prepared to pay ridiculous prices simply won’t be able to get a ride at certain times of day
Good luck trying to rush to work in the morning, or home after a huge MRT breakdown. Maybe it’s time to buy that electric bicycle after all.
What do you think will be the effects of taxi surge pricing? Tell us in the comments!