Ahead of the surge: Grab says new option will be 'cheaper, faster'

Cheaper rides and shorter waiting time.

This is the promise of ride-hailing platform Grab, which announced its dynamic pricing model for taxi fares yesterday.

A new option called JustGrab, which combines taxis and private hire cars on the Grab platform, will be beta-tested from today and progressively rolled out before its public launch on March 29.

Those who choose the JustGrab button on the Grab app will get either a taxi or private hire car at the same price quoted.

Current options such as GrabCar and the metered Grabtaxi will still be available, but offer different and probably higher fares than JustGrab.

Mr Melvin Vu, the head of Grabtaxi Singapore, told The New Paper yesterday that the larger pool of drivers on JustGrab will mean that its prices will not fluctuate as much.

It also expects this new option to cut waiting time for rides by up to five minutes.

Dynamic pricing, also known as surge pricing, adjusts fares according to demand.

Last week, the Land Transport Authority and Public Transport Council gave taxi companies the go-ahead to implement this pricing model.

As used by Grab and ride-hailing rival Uber, it is meant to encourage drivers to get out on the road when demand is high.

But when taxi companies, including ComfortDelgro which controls about 60 per cent of the taxi fleet here, announced plans to introduce dynamic pricing earlier this month, several commuters expressed fears about higher fares and the availability of taxis on the streets, especially during peak periods when some cabbies might chose to rely solely on bookings to get higher fares.

Addressing these concerns, Mr Vu said surge pricing for taxis will be introduced in a "measured and calibrated" way and stressed that commuters still have the same choices as before, such as metered fares and current options such as GrabCar, GrabHitch and GrabShare.

He said less than 1 per cent of GrabCar fares over the past year were above $60.

And based on figures in January and February, less than 1 per cent of GrabCar fares were above $50.

He said: "Because of the large supply pool for JustGrab, it will most likely be cheaper than GrabCar and commuters will not experience such huge fares."

Dynamic taxi fares will be capped at $100.

Mr Vu also thinks only a "handful" of drivers may "hide" to get bookings during high demand, because current market conditions and heightened competition from ride-hailing companies have made it less profitable to do so.

JustGrab is an assigned system, which means passengers are matched to the nearest vehicle, he said.

"Some of our taxi drivers have told us that it might not make business sense during peak periods to cruise around, waiting for that supposedly high fare that comes their way," he added.

Grab will take a 10 per cent cut from cabbies assigned to JustGrab passengers, while GrabTaxi cabbies will pay a flat commission of 50 cents.

Mr Vu admits some drivers may be uncomfortable with this, but they can be assured of at least 20 per cent more jobs with JustGrab.

He said: "Taxi drivers are very excited because they have been asking us why they can't use fixed fares and take GrabCar jobs.

"So we decided to work with our taxi partners because, increasingly, we are seeing more commuters who prefer the fixed fare model."