SINGAPORE – Ride-hail company Grab will increase its tariffs by $ 1 starting next month to improve driver revenue amid rising fuel and maintenance costs.
With taxi and private car drivers making up only 55 percent of prepandemic due to Covid-19 Phase 2 measures (elevated alert level), Grab said that no commission will be charged for the additional $ 1 from June 1 to June 30th
This means that for every trip they take with Grab for a month, drivers will get $ 1 more.
To help commuters adjust to the new tariffs and bear the additional costs, Grab is offering $ 1 vouchers for rush hour trips from June 1st through June 14th.
Every Grab commuter receives two vouchers per day and can redeem them on weekdays from 7:00 a.m. to 9:00 a.m. and from 5:00 p.m. to 7:00 p.m. and on weekends from 11:00 a.m. to 6:00 p.m.
The total number of vouchers that can be claimed is limited.
Grab said that with this price hike and its other support measures, an average driver could recover up to 50 percent of the revenue lost due to the current Covid-19 restrictions. This does not include any additional income from deliveries.
This is the first time since 2017 that the company has increased its base price.
The hike applies to all Grab transport services, with the exception of the standard taxi booking service, the GrabHitch car pool service, and the GrabCoach service. This was announced by Grab Singapore’s transport director Andrew Chan in a message to the drivers on Tuesday morning (May 25).
Grab began charging a platform fee of 30 cents last December for rides booked through Grab. It did so after the competition watchdog – the Singapore Competition and Consumer Commission (CCCS) – lifted restrictions in November.
Grab said the latest price hike came after “deep discussions” with his drivers and tripartite partners who provided feedback that tariffs have not kept pace with the cost of providing transportation services on the company’s platform.
Mr Chan said discussions about Grab’s tariff structure have continued for many years, even with the company’s hands tied due to the CCCS restrictions imposed in the wake of its merger with rival Uber in 2018.
“The pandemic situation as we see it today is volatile and we know we cannot wait any longer,” he said in his message to drivers.
“We believe this will help improve your income while also offsetting the price passengers are willing to pay.”
In addition to the price hike, Grab also launched a series of support measures for drivers on Tuesday to help them cope with tightened restrictions.
This includes additional incentives for Grab drivers performing delivery jobs in designated areas of high demand, and fixed-value cash discounts based on the total number of transportation and delivery jobs that drivers are completing at set times.
Eligible drivers who rent their vehicles from Grab’s Vehicle Rental GrabRentals also receive a rental discount of up to $ 45 per week.
Grab said, “The second phase (increased warning) and last year’s breaker occurred against a backdrop of rising costs to operate and maintain a vehicle – including fuel, maintenance, and repair costs – while tariffs on the Grab- Platform have remained constant since 2017 Taken together, these factors have a significant impact on takeaway driver revenues.
“The initiatives under this holistic program are therefore aimed at reducing the immediate financial burden on driver-partners and improving their overall revenues for longer-term profitability.”
Six of Grab’s fleet partners – Lion City Rentals, Auto Exchange Leasing, KH Leasing, MS Carz Leasing, Prime Transport and Limousine Services, and Roset Limousine Services – also offer rental discounts to tenants.
Last week, other operators launched their own driver support measures. Gojek adjusted its incentive system to make it easier for drivers on its platform to qualify for service fee discounts, while ComfortDelGro, Singapore’s largest taxi operator, increased its daily rent waiver from 20 percent to 50 percent per vehicle.
Other taxi companies have also pledged to offer additional rental discounts of at least $ 5 per day. Overall, the taxi operators have promised additional rental discounts of around 28 million US dollars.
Home rental companies and taxi drivers will receive additional cash assistance of USD 10 per day for the period May 16 through the end of June. The government is providing an additional $ 27 million to assist them during this period.
Transportation economist Walter Theseira of the Singapore University of Social Sciences said a price hike was inevitable.
“We are overdue for such a price hike as costs have changed in recent years, but no operator has been willing to change tariffs as the market has been severely disrupted by the entry of hail companies,” he said. “The ones who tend to suffer are the drivers, whose incomes will steadily decline each year if tariffs are not adjusted.”
The pandemic has also exacerbated the situation as the use of taxis and private rental cars is low and drivers can no longer rely on price increases.
When Grab increases its tariffs, all eyes will be on how big rivals Gojek and ComfortDelGro react. Associate Professor Theseira said, “In this market the dynamic is where the leader changes tariffs and the rest decide whether to follow suit. I don’t think the dust has just settled. “
Tammy Tan, ComfortDelGro’s group branding and communications officer, said her company will never adjust its metered tariffs or base tariffs unless demand has returned to pre-Covid-19 levels.
Gojek, who added a booking fee of 70 cents to his bookings last March, declined to comment.
A Public Transport Council (PTC) spokesman said he had been briefed on Grab’s plans to increase tariffs. She said the PTC’s focus is on making sure tariffs are transparent and clearly communicated, and it has reminded Grab to do so.
Meanwhile, Grab’s impending price hike has sparked some backlash among commuters and drivers alike. Some drivers said the increased fare wouldn’t make much of a difference given the low passenger volume, and Grab should cut its commission fee instead.
There are also fears that commuters will switch to other platforms, further reducing the number of drivers.
But for some drivers like Joseph Goh, 55, every dollar counts. While he wasn’t sure the price hike would work well, Mr. Goh said fuel costs have increased significantly and his operating costs have increased about 70 percent over his five years as a private rental car driver.
He said, “Any increase in income is good during this pandemic.”