Economists believe fares won’t go up

  • Nation
  • Monday, 08 Jul 2019

PETALING JAYA: Fares for e-hailing rides should not increase, as affordability is among the reasons passengers turn to them, say economists.

“If they hike up their prices, they will lose their market share. It would not be in their interest to do so.

“They will be under scrutiny when the regulations kick in,” said Sunway University economics professor Dr Yeah Kim Leng.

He believed that the quality of service would deteriorate as certain areas would have fewer drivers, resulting in passengers having to endure longer waiting time.

At the same time, he said the remaining drivers would have a more stable income due to less competition.

He also believed that taxi drivers would welcome the move for a level playing field.

Another economist, who did not want to be named, doubted that fares would go up.

“They may not increase the fares. It is more of a competitive market situation. Even taxi drivers can become Grab drivers, so they have options,” he said.

He said such regulations, if looked at from a logical standpoint, were necessary as they would create a level playing field for taxi operators.

“You have to be fair to taxi drivers. They need a few rides before they can start to make money. They have to pay for the rental of their cars on top of being subjected to regulations,” he said.

He said there was likely to be a significant dropout involving part-timers, who would experience a loss of supplementary income.

However, Alliance Bank Malaysia Bhd chief economist Manokaran Mottain believed that the moment regulations kick in for e-hailing drivers, fares were bound to go up.

“Sometimes when you have the peak-hour charges the prices are really expensive.

“Eventually, I think they can’t sustain this kind of business. Customers will always choose what is cheap,” he said.

He said it was a good opportunity for taxi drivers to think about how they could improvise their services and to look at the cost structure.

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