Grab responds to ride-hailing price increase issue – says no changes have been made to its fare structure

Ride-hailing fares – notably those of Grab – were recently reported to have increased by up to 400% during peak hours, sparking discontent from consumers who called for government intervention. Earlier this week, the transport ministry requested that certain ride-hailing companies explain and clarify the alleged increase in fares.

Yesterday, following a meeting with operators, the ministry said that ride-hailing providers had explained that the reason for the fare increase was due to a lack of drivers combined with a significant rise in demand for such services following the easing of restrictions.

It said that operators had assured the ministry that there more resources would be allocated towards increasing the number of drivers currently available. The ministry added that the government did not regulate fares, and had no plans to do so, with ride-hailing operators and providers permitted to set their fare structures based on their own formula and their terms of service with their consumers in a free market.

As an add-on to the ongoing topic, Grab Malaysia has issued a statement on the matter. In its response, the company made it clear that it has not made any changes to its fare structure. It said it adopts a dynamic pricing model to ensure its passengers get a ride when they need one, and that its drivers are compensated fairly for their time and effort – traffic congestion has also meant that the cost in both time and fuel to serve each ride had gone up.

It explained that when there are more people booking a ride than the number of drivers available in an area, fares would “surge” or go up to encourage more drivers to head to where the passengers are. It added that the price fluctuations, as the company terms it, is a result of there being fewer drivers to accept the sharp increase in demand. Grab stated that as of mid-May, the number of drivers on its platform was still less than 70% of what it was pre-pandemic.

The company said that barriers to entry for new drivers are also amplifying the issue. It explained that new drivers are required to meet various regulatory requirements, such as six hours of training, exams at driving schools, going through vehicle inspection and purchasing insurance, and collating and submitting documents to various government agencies for processing. It said that this places a structural limit to the speed at which new drivers could come on board.

In a bid to correct the supply and demand imbalance in the short term, the company said that it has implemented steps to increase the number of its drivers. The first is by increasing incentives for drivers to get back on the road during peak hours.

It will also offer a bonus of up to RM1,000 to any Malaysian who comes onboard as a new driver on its platform, and referral bonuses of up to RM300 to existing drivers to refer and help new drivers to Grab. The company said it is also set to subsidise up to 100% of total driver regulatory compliance costs, and assist them to navigate through these.

Grab advised its users to plan their trip and book earlier than usual, and also set an alert via the ‘Fare Alert Notification’ feature in the Grab app – users will be notified if the fare drops within the next 15 minutes

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