ComfortDelGro to benefit from dynamic taxi fare pricing

It has better chances of retaining existing hirers.

After numerous taxi companies including ComfortDelGro (CDG) earlier this year submitted plans to the Public Transport Council as they seek to introduce dynamic pricing of taxi fares (i.e. flat fee structure with no surcharges that is similar to the private hire cars’ fare structure), PTC and Singapore’s Land Transport Authority (LTA) on 17 Mar gave the green light as they said they have no objections to the proposals submitted.

OCBC said that this means that after taxi companies implement the new pricing structure, commuters when booking a taxi through a mobile app will have an additional option to choose either taxi fares based on dynamic pricing (i.e. fixed fares determined by demand at time of booking) or the current metered fares.

Here's more from OCBC:

In our view, we believe this move will further level the playing field between taxi companies and private hire car service providers by closing the gap between the different fare structures.

In addition, five other taxi companies in Singapore operating more than 10,600 taxis in total have partnered with Grab to offer the dynamic pricing fare option through the new JustGrab function in the Grab mobile app.

This new dynamic pricing in JustGrab uses the same fare structure as GrabCar private hire car service.

This means without surcharges, the fixed fare will be cheaper than taxi metered fares but the pricing may be higher depending on demand.

As Grab will dispatch the nearest taxi or private hire car to a commuter using JustGrab, we believe this will greatly dilute the market for GrabCar drivers with the influx of taxis offering same fares.

Hence, we believe this development is positive for CDG as it will increase its ability to retain existing hirers – assuming a decline in GrabCar drivers (which we believe to be mostly doing it on a part-time basis) over time, especially after private hire car driver licensing regulation kicks into play by 2H17.