The Land Transportation Franchising and Regulatory Board (LTFRB) has issued a number of orders in the past two weeks in a bid to keep fares charged by vehicles belonging to ride-sharing network Grab Philippines competitive after its rival Uber ceased operations in the Philippines.
Uber deactivated its app in the country on April 16 but days before that, the LTFRB told Grab Philippines to lower its cap on price surges from 2x to only 1.5x. Effectively that halved the surge premium from 100 percent of regular fares to only 50 percent beginning April 12.
Then, beginning April 20, Grab Philippines was told to freeze a component of its fare structure—the Php2 per minute charge that Grab started applying in June 2017. The order came after a congressman, Rep. Jericho Nograles, filed a complaint with LTFRB that Grab Philippines imposed the charge without duly informing its customers as well as the LTFRB.
However, beginning on Monday, April 23, the LTFRB again allowed Grab Philippines to bring back its cap on price surges to 2x from 1.5x. LTFRB officials explained that they have accredited at least two other ride-sharing companies, thereby creating a competitive environment that should constrain Grab Philippines from raising fares too much.
How did these regulatory changes actually affect Grab Philippines passenger fares in the past couple of weeks?
To find out, Entrepreneur Philippines used Grab Philippines’ mobile app to get a fare quote for a ride from Summit Media offices in Mandaluyong City to SM Makati, which covered a distance of at least 4.5 kilometers. We did this every couple of hours from 7 am to 11 pm for 12 days from Thursday, April 12 to Monday, April 23, and recorded the fares generated by the app.
The results are presented in the accompanying infographics. The main graph plots the daily average of the quoted fares at various times during the day across the 12-day period. The smaller graphs plot the quoted fares for each time period from April 12 to 23. The times when we failed to get a price quote are marked with the symbol for the question mark.
In general, the results seem to indicate a downtrend in passengers during the 12-day period in response to LTFRB’s twin orders.
This seems to be in line with what Grab Philippines Country Head Brian Cu said summarizing the results of the company’s own internal study of fare trends after the merger with Uber was announced in late March.
“On average, fares have gone down by two percent,” Cu said in a press conference on April 18. “Yes, it’s surging more often, kasi walang kotse (because there are no cars), but it’s surging less.”
However, there’s also a remarkable upward spike in Grab Philippines fares on April 23 (see graph). That seems to be associated with the LTFRB order reinstating the 2x cap on price surges.
Perhaps that suggests that in the absence of strong competition, regulation will play an important role in keeping prices fair to all concerned, especially the consumers.
Pauline Macaraeg is Entrepreneur PH's data journalist, while Lorenzo Kyle Subido and Elyssa Christine Lopez are staff writers