GIVEN that its drivers are making less than what is deemed as “decent” wage, ride-hailing app Grab Philippines is set to flex its financial muscle by earmarking P100 million per month to subsidize fares and help drivers recoup losses from congestion and fuel costs.
Brian P. Cu, who heads Grab Philippines, said his group is ready to spend the amount per month, until the Land Transportation Franchising and Regulatory Board (LTFRB) reinstates the P2-per- minute charge scrapped from Grab Car’s fare matrix in late-April.
“The subsidy will run as long as it’s needed and for as long as we have resources to do so,” he said, noting the subsidy program started Monday.
Cu explained that Grab drivers—transport network vehicle services (TNVS) operators—need to make at least P330 per hour to “make a decent living,” and “to cope with the traffic, high fuel and vehicle maintenance cost.”
The ideal scenario, he said, is for drivers to make P5.5 per minute, hence, if a trip’s fare is calculated below that level, Grab will be providing subsidy for that particular trip.
“For example, if a ride from Makati to BGC takes an hour because of heavy traffic despite the 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,” Cu said.
The subsidy only covers trips, and not down-times where drivers are still waiting for booking requests.
“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,” he added.
Cu said the fare subsidy is also Grab’s mechanism to get more drivers on the road, as demand continues to rise on a daily basis.
Booking requests made on Grab’s platform reach 800,000 requests daily, while supply of vehicles in Grab is only at 33,000 cars.
“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.
Reportedly, at least according to Grab, peers—or TNVS operators—are being discouraged by the lower fares due to the scrapping of the P2-per-minute charge.
Grab has since appealed to the regulator to reimpose the said charge. The government has yet to act upon the petition.
LTFRB Board Member Aileen B. Lizada said the petition is expected to be heard, but failed to give a definite date for the hearing.
Image credits: Nonoy Lacza