As Malaysia gradually transitions to the endemic phase, daily commuters who rely on eHailing services have complained about high fares and increased difficulty in getting a ride. Despite calls from some quarters to regulate eHailing pricing, the Ministry of Transport said providers are free to set their own fare structure based on their own formula in a free market.
Transport Minister Dr Wee Ka Siong said recently that eHailing providers are able to impose a maximum surcharge of 200% of the base fare and this was a policy set by the Transport Ministry in 2019. Any operators found charging above the 200% surcharged limit can face possible suspension or have their licence revoked.
On the social media space, there are strong arguments from both riders and eHailing drivers. Consumers have called upon the government to step in to regulate eHailing fares, while some eHailing drivers argued that consumers have other public transport alternatives such as taxis if eHailing is too costly during peak hours. We’ve reached out to Grab and AirAsia Ride to find out their take on the situation and what steps are taken to resolve the ongoing surge pricing issue.
Surge pricing to ensure fair fares to compensate drivers
Grab, which is the dominant eHailing provider in the region, said they have not made any changes to their fare structure. They have adopted a dynamic pricing model to ensure passengers are able to get a ride when they need one while driver-partners are compensated fairly for their time and effort. Grab said if there are more people booking a ride than the number of drivers available in an area, the fares will “surge” to encourage more drivers to head to locations where there is stronger passenger demand.
Meanwhile, AirAsia said its pricing for rides will surge according to the extra time estimated in traffic and the drivers will be compensated by the surge as part of the fare. AirAsia said it believes that fares have to be fair to both passengers and drivers. If there’s a traffic jam, they will ensure that the surge will be able to cover the extra time in traffic for their drivers. It added that it will not hike the fares simply due to the lack of drivers.
AirAsia says they cannot punish their ride passengers and make them pay double or triple due to a shortage of drivers. It added that their fares have always been 10-15% lower than the market rate.
The number of active eHailing drivers dropped by 30%
Some have called for increased competition in the eHailing space which could help to bring the fares down. According to the Land Public Transport Agency (APAD), there are 32 registered eHailing platforms in Malaysia and 21 of them are currently active in the Klang Valley. However, the main issue is the lack of active drivers to cope with the high demand for eHailing bookings during peak hours.
According to Grab, they are experiencing the early days of a shift to the endemic phase. In the past two years of lockdown, many of their driver-partners have become inactive on their platform due to COVID-19 concerns and a lack of demand for rides. It added that the price fluctuations that Grab users are seeing are a result of fewer drivers on the road accepting a sharp increase in ride demand from passengers. As of mid-May, Grab says the number of driver-partners on their platform is still less than 70% of what was pre-pandemic.
AirAsia Ride, which was launched 9 months ago, said they have noticed some drivers becoming less active after the market has reopened. This could be due to drivers having found another career or a full-time job, and AirAsia is glad that they were able to help provide income opportunities to their drivers during their times of need.
Barriers faced by platforms to acquire new drivers quickly
The obvious solution to address the surge pricing issue is to have sufficient supply of eHailing drivers available. However, getting a new driver on the platform isn’t as easy as before due to current eHailing regulations introduced in 2019.
According to Grab, the barriers to entry have resulted in a slower response time for new drivers to be onboarded to meet the sharp increase in demand. New drivers are required to fulfill various 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 added that the requirements place a structural limit on the speed at which new driver-partners could come on board.
To increase the supply of drivers to serve their customers, Grab is subsidising up to 100% of total driver-partner regulatory compliance costs and they are also offering referral bonuses up to RM300 for existing drivers to recommend new driver-partners. On top of that, they are also offering a bonus of up to RM1,000 to any Malaysians who get onboarded as a driver-partner on their platform.
AirAsia Ride says safety is their priority and they support the regulation in place to ensure all eHailing drivers are verified and qualified. However, they hope that all insurance companies are able to offer eHailing drivers the option to pay for eHailing insurance in daily and monthly modes. The current requirement to pay insurance annually can be a burden for some drivers.
What are Grab and AirAsia Ride doing to get more drivers online during peak hours?
Another factor that contributes to surge pricing is the large increase in traffic congestion. As independent partners, the drivers are free to work at any time and some may not find it worthwhile to accept jobs in congested areas during peak hours. Some complained that the earnings from the fare might not be enough to cover the time and cost just to reach the customer’s pick-up location.
To improve the availability of active drivers, Grab says they have increased incentives for driver-partners to get back on the road during peak hours. Meanwhile, AirAsia says they are also giving special incentives during peak hours for qualified drivers. AirAsia says they have a freedom of choice policy, where drivers are not forced to accept jobs that don’t suit them.
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