Supply-demand imbalance, lack of drivers cause e-hailing fares rise: Wee

by AZREEN HANI/ pic by BLOOMBERG

THE surge in e-hailing (EH) fares are due to a supply-and-demand imbalance and high traffic volume which leads to longer travel times, says Transport Minister Datuk Seri Wee Ka Siong.

“Some e-hailing companies have seen their number of registered drivers drop by some 30% compared to before Covid-19 hit Malaysia,” Wee said in a statement today.

“This lack of EH drivers has indirectly led to longer than expected wait times for a vehicle in some places.We are now also witnessing a sudden increase in the demand for e-hailing services after the country has transitioned to endemic phase on 1 April 2022,” he added.

Wee noted that the same period also saw a lot more economic activities compared to the height of the pandemic while daily life seems to have returned to some normalcy and expectedly, more traffic congestion.

“These factors have had the most effect on the fare algorithms employed by the EH operators which account for many factors including distance, traffic volume, weather patterns, as well as market supply and demand. They all play a part in the increase in fares lately.”

Based on the discussion between the ministry and the e-hailing operators, Wee said that these companies have assured of allocating more resources towards increasing the number of driver currently available.

“At the same time, the Government has also continued to ensure that more EHOs along with taxis and buses are available to provide commuters with better last-mile connectivity and more choices,” the minister explained.

In terms of fare structure regulation, Wee also said that the Government does not regulate the base fare and the surcharge fare cannot be more than two times the base fare, taking peak rates and fuel prices into
account.

He said that the EHOs are permitted to set their fare structures based on their own formulae and their terms of service with their consumers in a free market.

“The Government urges all EHOs to improve their communication channels with their consumers. We will continue to monitor the e-hailing industry to ensure fairness and prevent undue burden on consumers,” said Wee.

More than 130,000 individuals hold vocational licenses to work as e-hailing drivers. This group is expected to grow as more driving schools and EHOs receive more candidates to become e-hailing drivers for 21 EHOs with active licenses nationwide including the Klang Valley.