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How the Return of Time-Based Charges Will Impact the Cost of Car-Hailing Rides on Grab and Hype

Grab PH cuts maximum price surge from 2x to 1.6x to ease burden on customers
By Pauline Macaraeg |

 

 

Riders of ride-hailing companies Grab Philippines and Hype Transport Systems Inc. will have to pay the time-based charge again starting today, September 21, after the Land Transportation Franchising and Regulatory Board (LTFRB) lifted its suspension of the fare component on September 4.

 

In Memorandum Circular 2018-019, the regulatory board allowed the time-based charge to be applied to all types of transport network vehicle services (TNVS), provided that their transport network companies (TNCs) issue a breakdown of the fare to reflect the additional charge. The receipts should include the flag down rate, per kilometer rate, travel time rate and surge price.

 

Grab Philippines’ time-based charge is Php2 per minute while that of Hype Transport is only Php1.25 per minute.

 

In the meantime, Grab Philippines said it would temporarily lower its cap on surge pricing from 2.0x to 1.6x to help passengers cope with the adjustment of their daily transportation budget. They also said they will start providing an accurate breakdown of their fares, though the update might take up to two days to be completely running in their system.

 

Entrepreneur Philippines estimated the impact of the return of time-based charges on car-hailing rides provided by Grab Philippines and Hype Transport, and the results are shown on the infographic on this page. The estimates were based on a 12-kilometer ride lasting an hour, a typical scenario during rush hours. (See infographic for more info on the two TNCs’ fare matrices and how the return of the time-based charge will impact the cost of a car-hailing trip)

 

While the estimates show quite hefty increases in ride-hailing fares (ranging from 39 percent to as much as 75 percent), it is also expected to increase supply of TNVS units and make it easier for riders to book trips on transport network platforms. Grab’s offer to cut its price surge cap from 2x to only 1.6x could potentially cut resulting fares by more than a fifth.

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“We thank the LTFRB for hearing the plea of our driver-partners and reinstating the Php2 per minute travel time fare component. We hope that this will encourage our driver-partners to go back online and continue bringing more passengers home, especially this upcoming Christmas season,” said Grab Philippines Public Affairs Head Leo Gonzales.

 

Grab Philippines and TNVS driver groups have been actively campaigning for the reinstatement of the travel time fare component since it was suspended by the LTFRB in April. The company has repeatedly said the suspension caused losses to their driver partners. Many of them have had a hard time maintaining sustainable livelihood in the business, which in turn added to the causes of the vehicle supply crisis in Metro Manila, they said.

 

“The suspension of the Php2 per minute travel time fare component, coupled with the worsening traffic condition, high cost of fuel and other expenses such as car maintenance and amortization, have collectively forced driver-partners to go offline. This further contributed to the shortage of the TNVS supply in Metro Manila,” Gonzales added.

 

 

Related story: Is the LTFRB to Blame for What Grab PH Calls a Ride-Hailing Vehicle Supply Crisis? 

 

 

The suspension of the time-based charge is also a big factor why Grab’s allocation fell sharply from above 60 percent in March to below 40 percent in June and July, a sign of the scarcity of available rides on the network. TNVS drivers explained many chose to be less active especially during rush hours because they are not properly compensated for spending more time on the road due to traffic congestion.

 

 

Related story: Voices from the Road: TNVS Drivers Weigh Impact of LTFRB Actions on Viability of Ride-Sharing Business 

 

 

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Pauline Macaraeg is a staff writer of Entrepreneur PH. Follow her on Twitter @paulinemacaraeg

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