Temasek Holdings-owned ComfortDelgro is looking to copy Uber’s pricing strategy to prevent its drivers from leaving the company. Referring to their taxi drivers as “customers”, ComfortDelgro said that the existing fare structure has too many variations and charges, and is too complex and confusing.
“We’re looking at how to simplify the fare structure to have a flatter fare. There are close to 10 different flagdown rates, three different metered-fare structures, more than 10 kinds of surcharges as well as eight types of phone-booking charges in Singapore.”
ComfortDelgro said it will file an application to the Land Transport Authority (LTA) to allow them to use Uber’s “surge pricing”:
“ComfortDelGro would want to implement surge pricing – a term ride-hailing operator Uber uses to describe fares which rise according to real-time demand, and which could exceed $140 at crunch times such as rail breakdowns. We would love to do surge pricing, but I don’t think we’re allowed to. At the end of the day, whatever structure we adopt, we must take care of the earnings of taxi-drivers.”
Exodus of drivers crippling taxi companies
Unhired taxi vehicles are increasing rapidly as taxi drivers turn to car-sharing applications like Uber and Grab. Taxi companies are facing huge losses from the loss of rental income with vacant vehicles. According to the LTA, unhired taxi vehicles are reported at 5.9% in 2016 , up from 4.5% in 2015. TransCab reported a vacancy rate of 11% in 2016.
ComforDelgro is the major player in the taxi industry and own 61% of the total taxis vehicle in Singapore. The company has 16,821 vehicles but it refuses to disclose how many vehicles are sitting idle.
Taxi companies are now desperate and introducing new schemes to attract drivers. Earlier in January, SMRT Taxi announced that they will allow taxi drivers to hire on an hourly basis, while TransCab cut their rental charges by 34%.
The Singapore government last week introduced a new protectionist measure to protect local taxi companies by introducing more regulations for Uber and Grab. Uber and Grab drivers are now required to undergo vocational license test and pay additional registration fees to the government. Earlier this year, minimum mileage and peak hour requirements were removed for taxi drivers to assist the local taxi companies.
Although taxi companies are complaining about huge losses, both commuters and drivers are celebrating the cost-savings and additional income by paying lesser to the middleman.