Surge pricing for taxis: Wait in the rain or pay more for a cab?

via The Economist

Commuters used to have the luxury of choice – either to enjoy cheaper fares from Uber/Grab or opt to hail a cab to avoid the dreaded surge pricing.

Well, that’s about to change.

Four major taxi operators – ComfortDelGro, Trans-Cab, Premier Taxis and Prime Taxi decided to also implement dynamic pricing (aka surge pricing). Dynamic pricing rise and fall alongside demand.

I’m not a fan of surge but during high demand periods (peak hours and heavy rain), I think it is reasonable to expect cab fares to surge higher than present fares.

An experienced taxi driver we spoke to felt more taxi drivers will choose to drive during peak hours as that will significantly increase their earnings.

Mr Teo, 53, from Trans-Cab said, “For cabbies with no relief drivers, it’ll be tiring to drive the entire day. Why would they want to drive during off-peak when they can earn more during peak hours?”

That does make a lot of sense for taxi drivers who are strategic in maximising their income.

But what does it mean for commuters?

It’s going to be easier to get a cab, but it’s going to cost a lot more.

Dynamic pricing might help alleviate the shortage of cabs during peak periods but fares would be equal to, if not more expensive to Uber/Grab.

In recent reports, Trans-Cab’s Managing Director Teo Kiang Ang gave his assurance that metered fares will still be used for normal rides. That means if you hail a cab on the street during peak period, you will only be charged by meter (where surge pricing will not apply).

But if you think like a driver, what would you do? Do street pickups and earn little or take advantage of surge pricing?

How dynamic will the fares be?

Details of the dynamic pricing structure are not yet known to Trans-Cab drivers as the taxi operator and its partner Grab are tight-lipped on this issue.

However, Trans-Cab drivers will be attending training courses within these few days on how to use the grab app.

Will Trans-Cab divulge more information to their drivers?


In the meantime,  there’s still something to cheer about in case you’re also (like me) disappointed to learn about the upcoming changes in taxi fares.

Taxi fares may surge during peak hours but it will also go down during non-peak hours. Who knows? It might be even cheaper than Uber/Grab during non-peak.

If all else fails, we still have the public transport to rely on.

Featured image credit: The Economist

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