Comfort Delgro applies to use surge pricing for taxi bookings

By Linette Heng
The New Paper
Mar 4, 2017

It might soon become a problem trying to hail a taxi on the street.

Comfort Delgro, which controls 60 per cent of the taxis here, has applied to the Public Transport Council (PTC) to introduce surge pricing to taxi rides that are made through bookings, reported Chinese daily Lianhe Zaobao yesterday.

This move comes after reports that two other companies, Trans-Cab and Premier Taxi, had made a similar submission to the PTC.

If cabbies get to charge fares according to demand - similar to third-party ride-hailing apps Uber and Grab's surge pricing - this could drastically reduce the number of taxis cruising the streets in search of customers.

Surge pricing, also known as dynamic pricing, adjusts fares according to demand. As used by Grab and Uber, it is meant to encourage more drivers to get out on the road when demand is high.

Users have complained of paying up to five times the usual fare during a major MRT breakdown in July 2015.

The Straits Times understands that Comfort DelGro's demand-pegged fares would be different from the surge pricing mechanism.

It intends to simply flash a fare - say, $20 from Ang Mo Kio to Orchard on a Friday evening. The customer may reject this and opt for the metered fare, but it would be uncertain if there would be a cab available.

Industry observers approached by The New Paper think that cabbies would be even more incentivised to rely solely on bookings.

Singapore's high smartphone penetration rate means that most commuters would have no problem switching to bookings over street hails, they said.

But commuters who spoke to The New Paper were worried that surge pricing for taxi bookings would lead to overpriced fares. Financial consultant Julia Tan, 28, said: "If high demand means high pricing, doesn't that mean that taxi drivers will 'hide' during low demand and come out when demand goes up?"

Dr Park Byung Joon, an adjunct associate professor and transport expert at UniSIM, said the move by the taxi companies was "inevitable".

"Some have said that it is impossible for Uber and taxi companies to co-exist. Taxi companies here are becoming like Uber, while Uber, which has partnerships with many car rental companies, acts like a taxi company.

"It is difficult to predict taxi fares, which are purely dependent on market forces, because a lot also depends on commuters' decisions.

"This is definitely interesting for transport researchers, but there is a possibility that commuters might suffer."

Transport economist Michael Li said the taxi companies might be losing their "edge" by applying surge pricing.

He thinks the majority of the taxi firms' current customers, whether they are using the app or hailing a taxi from the street, are probably happy with the current system in terms of its reliability and comfort.

Prof Li said: "The surcharges are a transparent form of pricing, but it remains to be seen if dynamic pricing would be truly beneficial to commuters.

"Price is just one dimension of competition. The incumbents could also choose to leverage on their focus to service."