Opinion

Competition in Singapore’s ride-hailing market can lower fares, raise driver payouts: study

Healthy competition from players in Singapore’s ride-hailing market lends a hand in lowering average commuter fares and increasing driver earnings, a study by the National University of Singapore (NUS)’s Business School found.

According to the study, which was conducted independently by the Centre for Governance, Institutions and Organisations (CGIO) at the NUS Business School and commissioned by Gojek, average daily ride-hailing fares went down 11% since new players entered the market following the Grab-Uber merger, while 55% of drivers reported increased earnings.

The organization polled 1,000 drivers and commuters who use multiple ride-hailing services available at the time of the study. It was carried out between July and August of this year, almost a year after the Competition and Consumer Commission of Singapore (CCCS) issued an infringement decision on the Grab-Uber merger.

The study analyzes how Singapore’s ride-hailing landscape changed over the past 12 months, which saw the merger taking place and other players like Gojek, Ryde, and Tada entering the market.

The study analyzes how Singapore’s ride-hailing landscape changed over the past 12 months, which saw the merger taking place and other players like Gojek, Ryde, and Tada entering the market.

The report also says that 52% noted the resulting increased availability of service after the entrance of new players. The number of driver-partners who felt satisfied with the incentives offered by ride-hailing providers more than doubled compared to the period following the merger.

The survey results supported CCCS’ previous findings that the lessening of competition after the Grab-Uber merger was to “the detriment of Singapore drivers and riders.” According to the new study, 63% of polled commuters said that their ride-hailing experience has been negatively affected by the merger, while 87% of the drivers reported decreased earnings.

The unhappiness could be the result of a pullback of incentives, which means that commuters and drivers could have been enjoying rates or payouts that were unsustainable.

Grab officially purchased Uber’s Southeast Asia operations in March 26, 2018. Consequently, Grab became the dominant ride-hailer – if we exclude apps from taxi companies, that is. Prior to that, the two companies were archrivals in the space and were constantly fighting costly discount battles.

Now, Grab is duking it out with Indonesian unicorn Gojek, which has been racking up millions in investments from companies such as Google, Tencent, JD.com, Astra, Mitsubishi, Visa, and most recently AIA Indonesia.

Gojek has been firing on all cylinders as of late, with the recent launches of its own video-streaming service GoPlay and gaming platform GoGames.

Not to be left behind, Grab has also been busy raising new capital. In June 2018, it said it received US$1 billion of fresh funding from Toyota, the company leading its series H round.

The fundraise includes investments from companies such as Kia, Hyundai, Microsoft, Booking.com, Kasikornbank, Experian. Global financial institutions OppenheimerFunds, Goldman Sachs, and Citi Ventures participated as well.

Grab has also made a strategic investment in Singapore-based Ninja Van, launched an in-app hotel and ticket-booking features for Singapore, and started offering payments tech, microloans, and micro-insurance services all within this year. -Tech in Asia

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