The prices for e-hailing services have been increasing steadily.
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Many people have noticed that Grab is getting more expensive now, whether it’s Grab rides or food delivery or any of ther other services. Now, this is actually something that even Grab themselves have acknowledged, so you’re totally right!
But why is the price increasing? We asked Grab for an explanation.
The Dynamic Pricing Model
Everyone should be rather familiar with Grab’s dynamic pricing model, which sees a price surge during high demand.
This is to ensure that the drivers are compensated fairly for their time and effort, whether that means driving through bad weather, traffic jams, or low-traffic areas to get to you.
The fares ‘surge’ basically encourages more drivers to head to where passengers are waiting, because then they get paid more.
In a statement, Transport Minister notes that the government allows e-hailing operators (EHOs) to set their own pricing models in accordance with the free market.
The Government does not regulate the base fare and the surcharge cannot be more than two times the base fare, taking peak rates and fuel prices into account. The EHOs are permitted to set their fare structures based on their own formulae and their terms of service with their consumers in a free market.Transport Minister Wee Ka Siong in a statement
But this current price increase we’re seeing isn’t because Grab changed their pricing model at all.
The “Constant” Surge
The “raised prices” we’ve seen recently is not because Grab made changes to the way they charge customers. Instead, it’s because right now there’s simply way more riders than drivers on the road.
The sharp increase in demand for rides, coupled with the few drivers on the road to accept those requests, led to a price surge for most people.
As of mid-May 2022, the number of Grab drivers is still less than 70% of their drivership pre-pandemic!
Grab says that there are a couple of reasons for the imbalance in demand:
- Shifting to endemic phase and recent festive periods means increased activity for riders, but drivers who have become inactive during the pandemic over Covid concerns and lack of demand during that time did not fully return to driving for Grab.
- Strict Grab requirements for new drivers means a delay before drivers can start servicing riders. Because all new drivers are required to meet various regulatory requirements; such as 6 hours of training, exams at driving schools, vehicle inspection, purchasing insurance, and collating and submitting documents to various government agencies for processing; it takes them a while before they can actually hit the road to pick up riders.
- The traffic got way, way worse during after the lockdowns. Yeah, you’re not crazy: traffic congestion is worse than pre-pandemic, and it affects Grab drivers too. Because they are also caught in the jam, it means more time and fuel needed to serve each ride while also reducing the effectiveness and number or rides a driver can provide in the same amount of time.
So What Now?
Not to worry, it doesn’t mean that you’ll need to live with this high surge pricing forever. Grab Malaysia is already implementing steps to incentivise drivers to pick up more passengers or join as new drivers.
So far, they have:
- Increased incentives for driver-partners to get back on the road during peak hours
- Subsidised up to 100% of total driver-partner regulatory compliance cost
- Offered referral bonuses up to RM300 to existing driver-partners to refer and help onboard new driver-partners
- Offered a bonus of up to RM1,000 to any Malaysians who get onboarded as a driver-partner on their platform
- Assisted new driver-partners to navigate through various regulatory processes from medical checks, training, exams, vehicle inspection and licensing
In the meantime, riders can use some of these tips for more affordable Grab rides:
- Plan their trip and book earlier than usual: Book your ride earlier and be ready when the driver arrives, especially if you have a flight to catch or need to get to an important meeting. Please do not cancel a ride if you manage to get one even though the waiting time may seem unusually long!
- You can also set an alert via the ‘Fare Alert Notification’ feature in their Grab app. You will be notified if the fare drops within the next 15 minutes.
So not to worry, you can still rely on Grab for getting around! You just need to get ready earlier.
Anne is an advocate of sustainable living and the circular economy, and has managed to mum-nag the team into using reusable containers to tapau food. She is also a proud parent of 4 cats and 1 rabbit.