Surge pricing aims to balance supply and demand during heavy traffic.
Market forces, whether we like it or not, are driving taxi fares higher—especially during rush hours.
Transport network vehicle services (TNVS) companies like Grab allow their drivers to charge the higher fare as an incentive. The increased charges compensate for the higher fuel consumption of Grab drivers in snail-like traffic.
But the Land Transportation Franchising and Regulatory Board’s (LTFRB) does not see the merit of surcharges in cab fares. It is proposing to cut the surge fees by 50 percent to alleviate the plight of taxi commuters.
Grab drivers naturally will not agree to the idea of the LTFRB. To put it in proper context, the surge fees do not go to TNVS companies. Drivers receive the bulk of them. Reducing surge rates does not hurt big corporations. Instead, it cripples the ability of drivers to earn a decent living.
Grab Philippines’ head of public affairs Gio Tingson explains that over 80 percent of the surge income goes to the driver. The arrangement encourages Grab drivers to ply their trade even if traffic is at a standstill.
Rising fuel costs, increased vehicle maintenance expenses and the heavy traffic congestion in Metro Manila amid the holiday rush are the bane of taxi drivers. The surge fees ensure drivers are fairly compensated for the additional challenges they face. Removing or drastically cutting these fees would result in lower driver incomes and outright losses as well.
Paying surge rates, or increased road toll for that matter, is a consumer choice. Commuters have the option to forego Grab or any TNVS alternative and settle for the ordinary taxi. TNVS companies, though, offer better services and more convenience than the ordinary taxi.
A group calling itself TNVS Community Philippines (TCP) has warned that capping or reducing the surge fees could drive many TNVS operators off the road altogether. The surge fees actually offset the additional expenses borne by drivers during peak hours or the Christmas rush.
Tingson noted that the government allows surge pricing as long as Grab follows the parameters set by the LTFRB. The regulator knows fully well that the mechanism helps ensure there are enough drivers to meet the high demand for rides.
The ill-advised LTFRB proposal will hurt the industry and the commuters. Surge pricing aims to balance supply and demand during heavy traffic. It encourages more drivers to come out during the high-demand period.
If drivers pull out because of lower earnings, passengers will find fewer available rides and face longer waiting times and potentially higher stress levels in trying to secure transportation.
The LTFRB proposal, instead of helping commuters, will ultimately leave passengers stranded when they need rides the most.
The LTFRB believes that adding TNVS slots can mitigate these problems. The regulator again is misjudging the situation.
Even if more TNVS drivers are accredited to ply the roads, they won’t accommodate the request of passengers if they receive little to no pay for their hard work.
Surge rate cuts hurt everyone. Drivers lose income and commuters lose their access to rides. The public transportation system loses a viable option.
Grab is an anomaly spawned by the pandemic in 2020, when people were cooped up in their homes and unable to leave their house. Now, its services have become the new normal―providing jobs and livelihood and creating a multiplier effect on the Philippine economy.
Grab, according the Asian Development Bank, is a key driving force in the Philippine economy. Its innovative service model provides flexible and substantial livelihood opportunities, offsetting a rise in unemployment, and helping thousands of Filipinos weather economic adversity.
Thus, instead of pursuing rushed and shortsighted policies, the LTFRB should engage in an open dialogue with TNVS drivers and other stakeholders to find balanced solutions. We need a system that supports fair earnings for drivers while keeping transportation accessible to commuters.
If the LTFRB pushes its agenda, we will all be left stranded—waiting for rides that will never come.
E-mail: rayenano@yahoo.com or extrastory2000@gmail.com
