ComfortDelGro opts not to introduce dynamic pricing

It will instead adopt a flat fare structure.

Authorities recently gave a go-ahead for taxi operators to introduce dynamic pricing for trips booked through mobile applications. ComfortDelGro has chosen not to introduce such scheme for now, and will instead adopt a flat fare structure for mobile bookings.

According to a report from UOB KayHian, the flat fare structure will be introduced on April 10.

"This is similar to taxi metered fares, except customers can have the transparency of a fixed fare before the journey starts," said the report.

To recall, Grab rolled out a new dynamic fare pricing service with JustGrab, where commuters can be picked up either by a GrabCar or a taxi.

UOB KayHian noted that compared to ComfortDelGro, taxi drivers partnering JustGrab are offered more options in income stream, which encompass both dynamic and metered fares.

"We note that fares for JustGrab are not necessarily always more expensive than ComfortDelGro during peak hours. In the near term, we reckon ComfortDelGro may face increased competition for drivers, from taxi operators partnering JustGrab to private hire cars," explained UOB KayHian.

This will, in turn, put further pressure on fleet hire-out rate.

Here’s more from UOB KayHian:

Having said that, we are not ruling out the possibility that ComfortDelGro may eventually introduce dynamic pricing.

Furthermore, we believe ComfortDelGro’s wait-and-see approach may also be part of its competitive differentiation strategy. As the only taxi operator not introducing dynamic pricing, CD may get an edge in terms of attracting drivers who prefer stability in income stream.

We maintain our hire out rate assumption at 97%, with 0% fleet growth in 2017-18.