Grab to provide subsidy for drivers

MANILA, Philippines – Ride-hailing company Grab Philippines announced on Tuesday, June 19, that it has begun to “subsidize fares to ensure decent driver earnings,” a move that it estimates would cost more than P100 million a month.

Grab said it began a fare subsidy scheme last Monday, June 18, in response to the decision of the Land Transportation Franchising and Regulatory Board (LTFRB) to suspend the company’s P2-per-minute travel charge.

In a statement on Tuesday, Grab said its drivers should ideally be earning at least P5.50 per minute or P330 per hour.

“Based on our computations, a TNVS (transport network vehicle service) driver needs to make at least P330 per hour to be able to properly provide for his family’s needs and to cope with the traffic, high fuel, and vehicle maintenance costs,” said Grab Philippines country head Brian Cu.

“Since [the] P2-per-minute component was suspended, we received a lot of painful complaints from our partners that their earnings are not sufficient anymore to make a decent living. That’s why we decided to step in.”

The subsidy will be provided to drivers for trips that fall below P5.50 per minute or P330 per hour.

Grab gave this example to illustrate how the subsidy would work: “If a ride from Makati to BGC (Bonifacio Global City) takes an hour because of heavy traffic despite short distance, and fare is computed at P120 only, Grab will return to the driver the P210 difference to make sure he made P330 for that one-hour trip.”

The ride-hailing company reiterated on Tuesday that there continues to be a vehicle shortage on its platform, with only 33,000 cars available for 600,000 to 800,000 passenger bookings a day.

“With guaranteed earnings, we hope that this subsidy will also urge our partners to be more confident that they will make money for any trip they get and continue providing quality service to the riding public,” Cu said.

He added that the subsidy is different from incentives which are “only a bonus for drivers who hit a certain number of rides.”

The subsidy will be in place, according to Cu, “as long as it’s needed” and the company still has funds for it.

Grab has been criticized for alleged overcharging and “deteriorating” service, after it acquired Uber last March. The Philippine Competition Commission (PCC), which is reviewing the Grab-Uber deal, said that Grab has taken control of 93% of the local ride-hailing market, leaving commuters on the losing end.

The LTFRB has since accredited 5 new ride-hailing companies, but the PCC does not expect these firms to challenge Grab’s dominance anytime soon “because it would take a significant amount of time and cost to build a driver and rider base.”

Grab maintains that it does not charge illegal fares, but launched a “100-day improvement plan to improve driver and rider experience” in response to complaints of poor service. – Rappler.com