RIDE-HAILING apps in Southeast Asia have a tough time competing for the thrifty hearts of their customers, who are always looking out for the best deals. And if their presence wasn’t already bad news for local taxi companies, the battle for the cheapest fares are leaving them floundering.
According to a study by e-commerce comparison platform iPrice, Grab is the cheapest option for short distance trips up to five kilometers overall, while Uber fares better when it comes to long distance trips up to 20 kilometers.
However, some countries show preference for one platform over the other. Indonesia, for instance, prefers Uber for both trip distances, as does Thailand and Vietnam. The Philippines is the only country that chooses Grab to ferry them across both distances.
In the Philippines, it’s between 40 to 45 pesos cheaper to travel both distances with Grab rather than Uber and local taxis. But Grab’s popularity there could also be due to Uber’s unavailability in the country because of the absence of Google turn-by-turn navigation needed by the app, except in Manila.
Fares for riders in Singapore are the highest across the board. Singaporean riders pay US$5.60 for 5 kilometer rides and US$12.80 for 20 kilometer rides via Uber, and US$4.30 and US$11.60 for both distances via Grab.
Vietnamese riders also fork out much higher fares than other SEA countries when it comes to longer distances. Uber costs US$7.60 and Grab US$9.50 for 20 kilometer rides.
The study shows that while Grab’s foothold in Southeast Asia seems fairly concrete, customers are still open to comparing prices between both platforms to get the most bang for their buck. But the increasingly competitive streak in the region has drawn criticism against the apps – and it’s definitely pricing local taxis out of the picture.
Earlier this year, both Grab and Uber announced they were reducing their fares. Uber faced criticism for the move by taxi unions, who said it would hurt drivers and the industry. But Uber Singapore rebutted by saying that more competition is “always a good thing”.
Uber’s general manager Warren Tseng was quoted by Today Online saying: “What we also see when there’s competition is that it makes competitors innovate more and tighten up their operations as well… pushing the envelope and making others innovate as well.”
There’s also the question of regulation – as the popularity of the apps keeps increasing, governments are struggling to keep up to ensure the marketplace remains fair for all players.
In Indonesia, ride-hailing platforms are required to have their cars go through road safety tests, and they must be registered as commercial vehicles. In Singapore, a new regulatory framework has been put in place that requires the drivers to have a vocational licence by 2017.
As the industry evolves, consumers might see fares fluctuate but it’s really more interesting to see what regulations are developed and how other platforms will be able to move forward with their own businesses amid an ever-shifting landscape.