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Long-term solution amid temporary reduction in Grab fares needed

While ride-hailing firm Grab gives temporary relief to passengers by reducing its surge pricing cap, Senator Win Gatchalian believes this is just a band-aid solution that will not effectively address Grab’s high fares brought about by the lack of available drivers especially during peak hours, and the lack of competitors in the market.


PARAÑAQUE CITY, Philippines – A mobile phone user taps the Grab app to avail its ride-hailing service, 21 Dec 2019. Grab is the country’s dominant Transport Network Vehicle Service (TNVS) provider with 45,000 operators, that provided around 700,000 ridership in November. Photo by Mark Cayabyab/OS WIN GATCHALIAN

Grab has temporarily reduced its surge pricing cap from 2x to 1.7x on Friday after officials of the Land Transportation Franchising and Regulatory Board (LTFRB) met with Transport Network Vehicle Service (TNVS) companies to address the mounting consumers’ complaints on the issues of lack of availability and overcharging. The reduction will be in effect only until the 24th of December.

Surge pricing is a component in the fare matrix of the ride hailing firm. It is computed based on the time covered and distance traveled in a trip, excluding the base fare.

“Pinaunlakan natin ang paanyaya ng LTFRB nuong Hwebes at narinig natin ang commitment ng Grab na babaan pansamantala ang kanilang surge cap hanggang December 24. Bagamat makakatulong ito sa mga pasahero, para sa akin hindi ito ang long-term na solusyon upang matugunan ang problema sa mataas na pamasahe ng Grab na patuloy na nagpapahirap sa ating mamamayan,” Gatchalian pointed out.

Gatchalian made the statement as he called for a Senate probe that will scrutinize the operations of Grab as a dominant player in the country’s ride hailing industry.

“Maghahain ako ng resolusyon upang busisiing mabuti kung ano ba ang puno’t dulo ng problema sa surge pricing. Gusto natin malaman kung dapat ba na gawing mas mababa pa ang 2x surge price na nae-enjoy ng mga TNVS at ano ang magiging impact nito sa pangkalahatan, lalo na sa usapin ng supply at demand,” he said.

November 2019 data from the LTFRB show that it has already issued provisional authority to 49,226 operators and issued 11,305 certificates of public convenience, bringing the total number of TNVS units in the country to 60,531.

Grab, being the dominant player in the country’s TNVS industry since the departure of Uber last year, have 45,000 operators while the remaining 15,531 units are distributed among minor TNVS players. However, Grab reported that its daily ridership in November was around 700,000 and even went up by approximately 80 percent this December.

During Thursday’s hearing, representatives of Grab claimed that their online drivers decreased by 3 percent as of December, causing a poorer allocation of units for an increasing demand. Furthermore, Grab said traffic aggravated the whole situation as the increased travel time per ride reduced the number of trips drivers can service at a given time.

“Let’s not look for band-aid solutions or else these problems will continue to persist. In fact, the complaint on surge price has always been recurring, especially during the Christmas season. We are demanding long-term solutions to our regulator to finally put this problem to rest,” he ended.