Here's why there's surge pricing on Grab even when it's not rush hour
Scratching your head at Grab Philippines' apparent increase in their fares even when it's not during the busy hours?
Booey Bonifacio, Grab Philippines' director for public affairs, shed light on the surge pricing in an interview on TeleRadyo Serbisyo. The main reason for this, she said, stems from the law of supply and demand, an important concept in economics.
"We are perpetually in a state of 'yung demand mas malaki kaysa sa supply and based sa economic principles, then mag-su-surge pricing po talaga tayo," Bonifacio said.
She exemplified this through the estimated 15 million people living in Metro Manila. Should three million of them attempt to book Grab's services, there would not be enough cars to accommodate them.
This is because the Land Transportation Franchising and Regulatory Board (LTFRB) has limited the number of authorized transportation vehicles to between 40,000 and 50,000.
When asked why the surges are still present during the wee hours of the day, Bonifacio explained, "For example, mayroon tayong mga BPO [workers], kung mas marami po 'yung nagbu-book ng ride tapos kaunti po ang driver, then kahit po 3:00 ng umaga magsu-surge din po talaga 'yung presyo natin."
However, she assured that they are continuously working with the LTFRB to expand the slots of Transportation Network Vehicle Service (TNVS).
"Kasi pre-pandemic, ang authorized slots sa TNVS—for the whole industry po ah, wala namang exclusivity doon sa slots—ay 65,000," Bonifacion said.
She further noted that the additional rates go directly to the drivers.
"Yes, we do take commission, 'yun 'yung parang terms and conditions natin sa paggamit ng platform, pero 'yung lion's share ng surge is really for the drivers," Bonifacio said.
"Incentive po ito para sa driver, para po lumabas siya kapag sa traffic, kapag sa madaling araw, so incentive po na it's worth his or her time to drive. 'Yun po ang function ng surge," she continued.
Grab currently charges customers with a base fare of P45, with an additional charge of P15 per kilometer and P2 per minute.