When businesses work together, consumers sometimes benefit. For instance, nobody’s complaining about the Scoot and Tigerair merger, which has resulted in Scoot opening up more long-haul destinations.
But sometimes, businesses conspire to give customers the short end of the stick—especially when they have a huge market share or a monopoly over certain services.
So when ComfortdelGro and Uber recently announced they’d be forming an alliance, not everybody was happy about it. ComfortDelGro is Singapore’s largest taxi operator, and Uber the largest private car hire company. The alliance will put a massive fleet of cars and taxis in the hands of one shareholder.
Transportation is a touchy subject, and with the MRT breaking down at the frequency of a kiasu student’s tuition sessions, the only modes of transport Singaporeans can really rely on in times of trouble are car sharing services like Grab and Uber, and taxis.
The alliance hasn’t even been approved yet, and already ComfortDelGro is introducing dynamic pricing for taxis.
What does this mean for Singaporeans?
Be prepared to pay more during peak hours
Make no mistake about it, this isn’t exactly a welcome announcement to Singaporeans. If we want to pay dynamic fares, we’d turn to Grab and Uber, not taxis.
Taxis’ only saving grace is the fact that taxi fares are lower during peak hours and unexpected surges, such as during the recent flash floods and MRT breakdown.
For instance, during the recent flash floods, Uber and Grab prices increased by almost 3 to 4%. Customers who did not want to pay surge pricing had the option of getting a cab—subject to availability, which is another can of worms.
But at least the choice was there. If taxis start converting to dynamic pricing, that will reduce the number of available cabs during peak hour, making it almost impossible to get one.
It will also mean that for the majority of commuters, the only option will be to grit their teeth and pay no matter how high prices surge.
More discounts and promos
Grab and Uber have become famous for their promo codes and offers, which have been very effective in luring Singaporeans over to the private care hire side. Get $5 off your rides, $8 off your first two rides and so on.
The alliance might enable Uber to introduce promos applicable to cab rides booked on UberTaxi.
But why would they want to? Well, let’s be frank, fewer and fewer Singaporeans are taking taxis right now. And when dynamic pricing is introduced for taxis, it’s likely the number will fall further, unless something can be done to incentivise customers use them.
Commuters can still pay through Comfort’s app
There is a silver lining. Commuters can still choose to book through ComfortDelGro’s Taxi Booking app and pay the normal metered fare rate.
However, it remains to be seen whether taxi drivers are going to be selective and only accept dynamic fares.
Given drivers’ track record of only accepting passengers that can maximise their earnings, it is possible that during surge periods drivers will refuse to accept customers who want to pay metered fares.
Taxi drivers might benefit
It’s no secret that private car hire services have basically killed the taxi industry in Singapore, with more cabbies giving up their taxis.
The alliance might be good news for taxi drivers or aspiring taxi drivers if it drives a reduction in taxi rental rates, or the introduction of subsidies or incentives to offset rental costs.
But whether that will happen really depends on whether customers will even continue using taxis given the introduction of dynamic pricing, and how hard the alliance is willing to fight to keep them.
Are you happy that taxis will be offering dynamic pricing? Share your views in the comments!