E-hailing fare hike: APAD conducts analysis on need for change in regulatory aspects

KUALA LUMPUR, May 22 (Bernama) -- The government will monitor e-hailing services from time to time as well as gather and analyse information before any changes are made, including regarding the proposed fare regulatory mechanism.

The Land Public Transport Agency (APAD) said factors such as the environment of drivers, passengers, service providers and others must be taken into account to ensure balanced supply and demand.

According to the agency, the concept of e-hailing service involves mutual agreement between users and service providers for travel bookings through an application that displays the fare amount and users have the option to continue with the booking or not.

"To date, there are more than 10 major e-hailing service providers offering the service," said the agency in a statement to Bernama following consumer complaints regarding the current e-hailing price hike and driver shortage especially during peak hours.

The service fare was reported to have increased up to 400 per cent during peak hours, triggering dissatisfaction among consumers and some other parties. They also called for government intervention, among others, in relation to price regulation.

Meanwhile, Universiti Teknologi Malaysia Azman Hashim International Business School senior lecturer Dr Nur Azam Anuarul Perai said the proposal to regulate prices such as setting a ceiling price was feared to cause a shortage of drivers who would quit due to inadequate returns.

"Price hike mostly occur during peak hours where demand is usually higher and the situation will be worse if no driver agrees to respond to passenger demand," he said.

On the possible fare increase and drop in service quality due to market dominance by certain companies, Nur Azam was of the view that the hike was not necessarily due to monopoly practices but it was also influenced by many other factors.

He opined that the high demand and the existing supply challenges were among the factors contributing to the rise in fares that created a seller’s market, namely a situation in which the price is set by the seller or service provider.

“It is an inevitable phenomenon in the free market where prices are influenced by demand,” he said.

Nur Azam also ruled out the existence of elements of monopoly in the industry market as there were no restrictions for any party to set up an e-hailing company and the absence of price control could also encourage competition among companies to offer reasonable prices.

Meanwhile, Federation of Malaysian Consumers Associations (FOMCA) deputy president Mohd Yusof Abdul Rahman hoped that more competition would exist among e-hailing companies to ensure consumers get satisfactory services at reasonable prices.

“The quality of e-hailing service is now being equated with the previous taxi services (before the existence of e-hailing) where the price is too high and unreasonable, especially during peak hours,” he said, adding that the authorities should probe the alleged monopoly elements in the industry.

-- BERNAMA