Over 10,600 cabs to offer dynamic pricing from next week

A taxi with a Grab label picking up passengers. The JustGrab price will depend on demand – the higher it is, the more passengers will pay.

Expect to pay less, “most of the time”.

That is the promise GrabTaxi Singapore head Melvin Vu made to commuters when he revealed that from next Wednesday, five cab companies will join its private-hire cars in offering dynamic fares.

Trans-Cab, SMRT, Premier, Prime and HDT Singapore Taxi, which operate more than 10,600 taxis in total, will offer the fare option through the new JustGrab function in the Grab app.

JustGrab will use the same fare structure as the GrabCar private-hire service, which has a base fare of $2.50 and a per kilometre rate of 50 cents – cheaper than metered taxi fares. If the customer agrees to the upfront price, the nearest taxi or private-hire car will be dispatched.

Just like GrabCar, the price will depend on demand – the higher it is, the more passengers pay, although there is a cap of $100.

But because JustGrab can call on both taxis and private-hire cars, it should be cheaper “most of the time” compared with GrabCar, which can call on private-hire cars only, said Mr Vu.

Dynamic pricing, as used by GrabCar and Uber, means private-hire cars are generally cheaper than taxis during off-peak hours and after midnight, as there is no late-night levy.

Under GrabCar, a trip from Tampines to Choa Chu Kang during the peak periods will cost an average of $25, for example. A trip in a metered taxi – with a flagdown fare of between $3.20 and $3.90, and a metered rate of between 55 cents and 62.5 cents per km, for the first 10km – will cost on average about $29.

The dynamic pricing method has been criticised by some for being exorbitant in periods of high demand.

However, Mr Vu noted that last year, less than 1 percent of GrabCar fares went above $60.

“Most of the time, our fares are hovering about the same as metered fares, if you take into account (cab) surcharges,” he added. “It is only for that 1 percent, under different circumstances, such as heavy rain, Christmas Eve parties… when fares tend to flex upwards.”

Mr Vu said the company will retain its GrabCar service for now but, as with all other Grab services, it will be reviewed periodically.

Economist Jochen Krauss said upfront fares offer more certainty for passengers, and put cabbies in a “better position” because they can be compared directly against private-hire cars.

“Dynamic pricing is a great way of matching demand and supply… Ultimately, it trains the supply side to provide almost an exact amount of taxis that will be needed in a specific location, on a specific day, time or event,” said Dr Krauss, a managing partner of pricing consultancy Simon-Kucher & Partners.

Grab said it will launch a beta version of JustGrab today for its employees and selected users.

Meanwhile, ComfortDelGro, which accounts for 60 percent of the cab market share, has said it will not implement dynamic pricing for now. But it will “introduce a flat fare structure which will be similar to our taxi metered fares for trips booked via our mobile applications” in about two to three weeks.