LTFRB to Grab: Reduce cap on surge pricing

Pending its accreditation of new transport network companies (TNCs) in the wake of Uber’s exit from the country, the Land Transportation Franchising and Regulatory Board (LTFRB) has ordered Grab to immediately lower its surge pricing cap from twice the regular rate to just 1.5 times.

“This is to ensure that the fare will be at a rate that is conducive and acceptable to the existing number of transport network vehicle services (TNVS)  that are transferring to Grab,” LTFRB Board Member Aileen Lizada said in a special board meeting on Wednesday.

In recent days, passengers have complained of Grab’s high fares following the announcement that Uber would be stopping its Philippine operations.

‘Due to lack of drivers’

Grab Philippines country head Brian Cu maintained, however, that his company was not taking advantage of the situation, saying the price surge was due to the lack of drivers.

According to Cu, while there has been an increase of up to 70 percent in passenger bookings, the number of drivers in Grab’s system rose only by around 30 percent.

Cu also pointed out that Uber’s fare was lower compared to Grab’s because Uber’s approved per kilometer rate was P5 while theirs was P11.

In fact, had Uber’s pending fare hike petition been approved, it would be charging P12 per kilometer, making the two TNCs’ fare rates almost the same, he added.

Three other TNCs are seeking accreditation from the LTFRB: Lag Go, Hype and Owto.

LTFRB, PCC at odds

Meanwhile, the LTFRB has ordered Uber to stop operations in the country by April 16, a directive that contradicted that of the Philippine Competition Commission (PCC).

“In the interest of all TNVS and the riding public, we are giving you until April 15 to exist as a TNC. On April 16, you will cease and desist to exist as a TNC,” Lizada said in the board meeting.

The LTFRB order came just days after the PCC directed Uber and Grab to continue operating separately in the country pending its motu propio review of the deal which resulted in Uber’s exit from Southeast Asia and gave it a 27.5-percent stake in Grab’s operations in the region.

The PCC had expressed concern that the deal would give Grab a monopoly of the ride-hailing industry in the country.

During the hearing, Uber Philippines’ counsel Joseph Omar Castillo told the LTFRB that while they intended to withdraw their pending petitions for a fare hike and reaccreditation as a TNC in preparation for halting their operations in the country, the PCC order prevented them from doing so.

Lizada said that while the LTFRB understood Uber’s predicament, prolonging its operations would affect the riding public and thousands of app-based drivers. The PCC review is expected to last for around six months.

Just for compliance

“The soonest possible time that you will be able to resolve your concerns with PCC, the better,” she told the Uber representative.

Earlier, Cu said that in line with their transaction service agreement with Uber, they decided to continue funding the operations of the Uber app until April 15 just to comply with the PCC directive. The app was initially scheduled to go offline starting on April 9.

He noted, however, that their action not only defeated the purpose of the PCC order but also placed the riding public in danger since Uber no longer  has any back-end support in the country to address complaints and look after passengers in the event of a road crash.