Entry of new players in the ride-hailing market saw average commuter fares falling by 11 per cent, while 55 per cent of drivers say their earnings increased.

Singapore, 2 October 2019 – A study of Singapore’s ride-hailing market has underscored the importance of healthy competition in the market following the Grab-Uber merger in 2018. It found that since the entry of new players into the market, average daily ride-hailing fares have fallen by 11 per cent for commuters, while 55 per cent of drivers reported increased earnings (35 per cent of whom saw an increase of more than 10 per cent).

Conducted by the Centre for Governance, Institutions and Organisations (CGIO) at the National University of Singapore (NUS) Business School, the study polled 1,000 drivers and commuters who are users of multiple ride-hailing services present in the market at the time of the study such as Grab, Gojek, RYDE and TADA. CGIO independently collected, coded and analysed the data. The study, which was carried out between July and August 2019, comes nearly a year after the Competition and Consumer Commission of Singapore (CCCS) issued an infringement decision on the Grab-Uber merger. It analyses how the evolution of Singapore’s ride-hailing landscape over the past 12 months, which saw the merger take place, as well as the entry of new players into the market, has affected stakeholders.

Eighty per cent of polled commuters believed the entry of new operators provided them with more options, while 52 per cent of them noted improved availability of ride‐hailing services. The proportion of drivers who are satisfied with incentives offered by ride-hailing providers also more than doubled compared to the post-merger period.

The survey supports the CCCS’ findings that the merger led to a “substantial lessening of competition” to “the detriment of Singapore drivers and riders”, including an increase in effective fares of between 10 per cent and 15 per cent post-merger[1]. According to the study, 63 per cent of commuters polled noted a negative impact on their ride-hailing experience, and 87 per cent of drivers reported a decrease in their earnings after the merger.

In addition, 64 per cent of commuters also said that they had been adversely affected by the downward revision of customer rewards offered by ride-hailing platforms during the post-merger period.

Drivers were found to be particularly hard hit by the merger. Of the 87 per cent of them who indicated a decrease in their earnings, 77 per cent saw their earnings decrease by more than 10 per cent. Furthermore, 40 per cent of drivers on average indicated they were dissatisfied with the incentives during the post-merger period, compared to just 24 per cent before the merger.

“Since ride-hailing was introduced in Singapore in 2013, it has become an integral part of the country’s transport landscape. Our study supports CCCS findings that the Grab-Uber merger monopolised the ride-hailing market to the detriment of stakeholders.

“We are heartened to find that there is healthy competition in the market today as a result of the entry of new players and the responses from commuters and drivers support this,” said Professor Lawrence Loh, Director of CGIO at NUS Business School.

“As Singapore advances towards its 2040 vision of a car-lite, inclusive and even more well-connected transport system, it is imperative that the ride-hailing market – which will remain an integral part of that system – continues to be open, contestable and dynamic. For that to happen, healthy competition is an absolute requisite,” Prof Loh added.

The study was commissioned by Gojek and conducted independently by the Centre for Governance, Institutions and Organisations at NUS Business School.

[1] https://www.cccs.gov.sg/media-and-consultation/newsroom/media-releases/grab-uber-id-24-sept-18

Please refer to the Annex for key findings.

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Jack Loo
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NUS Business School
National University of Singapore
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Email: jack.loo@nus.edu.sg

 

About the Centre for Governance, Institutions and Organisations

The Centre for Governance, Institutions and Organisations (CGIO) was established by the National University of Singapore (NUS) Business School in 2010. It aims to spearhead relevant and high-impact research on governance and sustainability issues that are pertinent to Asia, including corporate governance, corporate sustainability, governance of family firms, state-linked companies, business groups, and institutions. CGIO also organises events such as public lectures, industry roundtables, and academic conferences on topics related to governance.

NUS Business School is known for providing management thought leadership from an Asian perspective, enabling its students and corporate partners to leverage global knowledge and Asian insights.

The School is one of the 17 Faculties and Schools at NUS. A leading global university centred in Asia, NUS is Singapore’s flagship university, which offers a global approach to education and research, with a focus on Asian perspectives and expertise. Its transformative education includes a broad-based curriculum underscored by multi-disciplinary courses and cross-faculty enrichment. Over 38,000 students from 100 countries enrich the community with their diverse social and cultural perspectives.

For more information, please visit bschool.nus.edu.sg, or go to the Think Business portal, which showcases the School’s research.

 

Annex

Key findings

  • Average daily ride-hailing fares have fallen by 11% since the entry of a new player into the market, as reported by polled commuters who are users of more than one ride-hailing platform.
  • 80% of commuters noted that the entry of a new player has provided them with more choice for ride‐
  • 52% of commuters reported better availability of ride‐hailing services after the entry of a new player.
  • 70% of commuters stated that the entry of a new player has eased the monopoly of a single ride‐hailing service provider.
  • 55% of drivers reported an increase in their earnings after the entry of a new player, of whom 35% saw an increase of more than 10%.
  • After the entry of a new ride-hailing player, the proportion of drivers who are satisfied with the incentives more than doubled compared to that during the post-merger period.
  • Drivers were found to be most satisfied with ‘fuel incentive’ (43%) and ‘minimum guaranteed pay‐out’ (31%) after the entry of a new ride-hailing player.
  • As a result of the Grab-Uber merger, 63% of commuters noted that their ride-hailing experience had been negatively impacted.
  • 64% of commuters said that they had been adversely affected by the downward revision of customer rewards offered by ride-hailing platforms after the merger.
  • As a result of the merger, 87% of drivers indicated a decrease in their earnings. Of this group, 77% saw their earnings decrease by more than 10%.
  • Nearly 40% of drivers on average indicated they were dissatisfied with their incentives during the post-merger period, compared to just 24% before the merger.
  • Of the incentives, drivers were most dissatisfied with ‘minimum guaranteed pay‐out’ (62%) and ‘fuel incentive’ (38%) during the post-merger period.
  • Following the Grab-Uber merger, 79% of drivers believed that the entry of a new competitor would result in better working conditions.
  • 68% of polled commuters noted they used ride-hailing frequently, from 1-10 times a week to more than 20 times a week.
  • Ride-hailing is also found to be particularly popular with those aged between 20 and 30 years old, with 47% of polled commuters falling into this category.
  • Of the drivers surveyed, the majority (56%) depend on ride-hailing as their main source of income, while entrepreneurs, who are self-employed and supplementing their income with ride-hailing earnings, form the second largest group of drivers (26%).

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