Ride-Hailing Firms get a go-ahead sign for peak pricing

Ride-Hailing Firms get a go-ahead sign for peak pricing

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Ride-Hailing Firms

The Surge pricing is a new system where when the demand for the traditional taxis surpassed the amount, then the rates to be increased. The traditional taxi aggregators say that this service uses the simple concept in order to meet the increased demand. The increase in the prices will automatically attract a huge number of drivers to a particular location, and as a result, the increase in the claim can be met. Once the demand and the supply are balanced, the folks need not worry because in this situation the prices will go back to normal. A query has been raised by the folks in which situation the surge pricing system will be charged high. During the peak hours holidays, events, etc the surge pricing system used by the taxi aggregator will be charged high.

The actual fact is that the surge pricing benefits the consumers through a huge number of taxis. The customers are not satisfied with this statement. Each and every one of us should know the basis on which the surge pricing started, how the multiplier increases etc. Rarely, the rates could go up as high as multiple times the normal rate.

During the unexpected tragedies, namely Sydney hostage crisis and Hurricane Sandy the surge pricing system was specifically criticized. In addition to the passengers, the drivers were also unhappy with the situation, since many would have traveled to the location of the surge pricing, but after a short period of time, the surge pricing would have been halted.

What is Uber Surge pricing and how does it work?

The Uber’s Surge Pricing is a computerized algorithm which is more or less similar to that of the calculation of the airline pricing.  When an enormous amount of Uber ride requests are made within a shorter interval of time in a given location compared to the number of Uber drivers currently available, the Uber prices of all the rides in that location is increased by a multiplier. The degree of the multiplier is calculated by the ratio between the total count of demands for an Uber ride and the supply of drivers at that particular time when the Uber flow goes high. The Uber prices are continuously rising and falling alternatively and so that the Uber rates at any one time and may place to change.

Generally, the Uber rates are calculated in a dynamic way. This means in times of higher demand the Uber prices may rise to make sure that the riders could get the rides sooner. Where there is more demand for the rides in a particular location, the surge will be higher one and hence the higher the multiplier for the Uber fare.

Uber Surge Pricing for the Drivers

There are three main colors that will be visible in the Uber driver’s app. The yellow color means increased demand. The orange color denotes that there is a heavily increased demand. The red color denotes that the demand has reached a level that provokes an upsurge. On the other side of the flip, for the customer’s the app is designed in such manner that the map does not display any location of surge pricing.

Ride-Hailing Firms

Whether the Singapore traditional taxi operators got permission to implement Surge Pricing?

The taxi companies in Singapore are in a discussion to introduce the dynamic fares which are popularly known to be surge pricing. This kind of pricing is especially for the trips booked through mobile applications after getting permission from the concerned authorities. Both of the Land Transport Authority and Public Transport Council have accepted the requests from taxi companies and ride-hailing platform known as Grab. The companies have informed the concerned authorities and this will come into effect as an additional option for the office-goers to book a taxi and also they do not have any objections to the proposal. In addition to the surge pricing, the cost of a traditional taxi trip booked through a mobile app will differ according to the demand.

In other words, we can say that the office-goers will pay more during the peak hour and when the demand period is high and also pay less when the demand is low. Grab, the one and only platform offering surge pricing model have announced that it will launch a new service along with the surge pricing for the traditional taxis with fixed and the upfront pricing. There is a huge difference between the two systems where the current taxi booking service known Grab Taxi which charges metered fares. Since 1998, the taxi companies have been able to set up their own fares which are governed by LTA (Land Transport Authority).

In 2016, the companies were instructed to standardize some parts of the fare amount.  The LTA has given a statement that it will enhance the third party taxi booking scheme to allow Grab to provide dynamic fare amount for the taxis. Under the current system, the third party taxi booking service providers are only allowed to allocate the booking fees and not the full fare amount. The maneuver by the traditional taxi companies in order to implement the surge pricing brings a huge competition from the private-hire car drivers under the ride-hailing applications like Uber and Grab.

Both Uber and Grab have the similar set of surge pricing schemes for the private hire-cars services.  At the initial period, Singapore’s largest taxi operator gave a statement that they are looking forward in order to revise the fare amount structure for its comfort and regional cab taxis. Already, the authorities have given the taxi operators the adaptability to introduce the surge pricing but they are not ready for this thing right now. They are ready to introduce a flat fare structure which is more or less similar to that of the taxi metered fares for the trips booked through the mobile applications. This new fare option will be brought into effect in a shorter period of time.

The second-largest taxi operator, have given a statement that they are ready to introduce the surging price as soon as possible in order to help the drivers so that they can earn more amount in the peak hours. The expert opinion is that the move towards the dynamic pricing is an essential one. The taxi services in Singapore is almost an extension of the public transport services but this is not the correct way of operating the taxi services in many other regions throughout the world. In most of the cities, the taxi services are only for the casual use. It is a kind of luxury transportation services for most of the folks.

 But in Singapore it is said to be this kind of service is something in middle between that of the mass public transport and the private transport. The main pointed to be noted is that the cars are mostly expensive in Singapore. There is a deed more in the superior direction, but this deed a necessary one because the cheap traditional taxi model has only been viable in the past because the driver wages were cheap. The real fact is that Singapore is a developed country and hence it is not a developing a country anymore.

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