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Two taxi firms plan to use surge pricing

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Dynamic fares based on demand will apply to those using Grab ride-hailing app

Some taxi fares could soon fluctuate according to actual demand for cabs.

Two taxi operators are planning to implement dynamic fares, popularly known as surge pricing, with a third looking to join the fray.

Trans-Cab, Singapore's second largest operator with 4,566 taxis, and Premier Taxi, the second smallest with 1,889 cabs, said they had informed the Public Transport Council (PTC) of their plans.

Prime, the smallest operator with 731 cabs, is considering implementing the controversial fare system too.

Though taxi fares are not regulated here, operators are required to keep the PTC posted of all changes before they are implemented. The operators are awaiting the PTC's response.

The new fares will apply only to commuters hailing a cab via the Grab ride-hailing app.

ComfortDelGro and SMRT Taxis have not indicated that they want to join the initiative.

Dynamic fares vary according to real-time demand - lower than the current structured taxi fares during off-peak hours but possibly much costlier when demand surges.

During major rail breakdowns, commuters complained of Uber fares exceeding $140 - four to five times that of a usual taxi fare.

But supporters of dynamic fares point out that in cases of high demand, the supply of taxis under the current pricing plan is inadequate.

Premier Taxi managing director, Mr Lim Chong Boo, said: "During the peak, there would not be enough taxis even if we doubled the fleet."

He said dynamic pricing "is a Grab initiative, and as a business partner, we are supporting it".

The new format will give commuters another alternative to secure a cab, he added.

"It'll also allow taxi drivers some levelling of the playing field," said Mr Lim, referring to cabbies complaining they are losing business to private-hire drivers due to the rigid fare surcharge system taxis must adhere to.

Trans-Cab managing director, Mr Teo Kiang Ang, said he was keen to roll out dynamic pricing, "but the PTC asked us to hold on".

Asked why the council's approval had to be sought since taxi fares have been deregulated since 1998, a PTC spokesman would only say: "PTC and Land Transport Authority will jointly review the applications."

Observers reckon the Government is waiting for market leader ComfortDelGro - which controls more than 60 per cent of taxis here - to make a move before making a decision.

Two weeks ago, ComfortDelGro's chief executive of taxi business, Mr Yang Ban Seng, said: "We would love to do surge pricing, but I don't think we are allowed to."

Assistant Professor Yang Nan of the National University of Singapore Business School's strategy and policy department said taxi firms may actually lose some competitive advantage as "people prefer conventional cabs because there is more certainty in their fares".

"If everything is too similar, it will boil down to price competition. And the taxi companies do not have the advantage of these other players," he said, adding that the latter "have deep pockets and money to burn, and they can press down fares".

SIM University economist Walter Theseira said: "On the one hand, it is a good idea to have better responsiveness. But the risk is it will be next to impossible to get a street hail.

"This may be a transitional concern though. If people move entirely over to getting a taxi via an app, then it won't be a concern any more."

Grab would not comment when contacted yesterday.