Ride-hailing fares – especially grabber – have recently been reported to have increased by up to 400% during peak hours, much to the displeasure of consumers calling for government intervention. Earlier this week, the Ministry of Transportation requested that certain ride-hailing companies explain and explain the alleged increase in fares.
Yesterday, after a meeting with operators, the ministry said ride-hailing providers explained that the increase in fares was due to a lack of drivers and a significant increase in demand for such services after the relaxation of restrictions.
It said operators had assured the ministry that more resources would be allocated to increase the number of drivers currently available. The ministry added that while the government has not regulated fares, and has no plans to do so, ride-hailing operators and providers have been allowed to set up their rental structure in a free market based on their own formulas and their terms of service with their customers.
As an add-on to the ongoing issue, Grab Malaysia has issued a statement on the matter. In its response, the company made it clear that it had not made any changes to its rental structure. It says it adopts a dynamic pricing model so that passengers get a ride when they need it and its drivers are fairly compensated for their time and effort – traffic congestion means the cost of both time and fuel to serve each ride. Went up
This explains why when more people book a ride than the number of drivers available in an area, the fare will “increase” or encourage more drivers to go where passengers are. It added that price fluctuations, in terms of the company, resulted in fewer drivers to cope with the sharp rise in demand. Grab reported that as of mid-May, the number of drivers on its platform was still 70% lower than in the pre-epidemic.
Barriers to entry for new drivers are also exacerbating the problem, the agency said. It explains that new drivers must meet various regulatory requirements, such as six hours of training, driving school exams, vehicle inspections and insurance purchases, and submission and submission of documents to various government agencies for processing. It says it has a structural limit on the speed at which new drivers can come on board.
To address short-term supply and demand imbalances, the company says it has implemented measures to increase the number of its drivers. The first is to increase the incentive for drivers to return to the road during peak hours.
It will offer a bonus of up to RM1,000 to any Malaysian who will ship on its platform as a new driver, and a referral bonus of up to RM300 for existing drivers to refer new drivers and assist in Grab. The company said it would subsidize up to 100% of the total driver regulatory compliance costs and help them navigate through them.
GRAB advised its users to plan their trips and book earlier than usual, and set a warning via the ‘RAB Alert Notification’ feature in the GRAB app – users will be notified if fares are reduced within the next 15 minutes.