Over-regulation kills
I have to admit – I am a fan of ride-hailing apps. Lately however, I have been hearing about how increasingly difficult it is to book a ride with these transport network companies (TNCs), especially during peak hours.
According to newspaper reports, the Land Transportation Franchising and Regulatory Board (LTFRB) only allows around 65,000 cars to service the 600,000 bookings a day. Of the 65,000, only 35,000 are active daily.
In January 2018, the LTFRB ordered a 45,000 common supply base of transport network vehicle service (TNVS) cars, less than a third of the 125,000 in operation at that time. The following month, the cap was raised to 65,000 common base. The LTFRB, with the support of an independent party and data from Uber and Grab, created a list of 55,000 vehicles, which is recognized as the official masterlist for processing of certificates of public convenience (CPCs) and provisional authorities (PAs). Since then, only 42,000 vehicles were left in the system. Out of this, 35,000 vehicles are active daily.
It seems the only reason why LTFRB wants to issue only so much CPCs and PAs is because of their inability to process so many applications. Issuing CPCs takes so much time and effort so why should the LTFRB insist on treating TNVS providers like other modes of public transport.
What made the situation worse is LTFRB’s decision to suspend Grab’s P2 per minute travel time charge last April 2018. This charge has been applied by Grab since July 2017 and by Uber since it started and was done in pursuance to an order of the Department of Transportation in 2015 allowing TNCs to set their fares.
On June 19, 2017, the DOTR issued Department Order 2017-2011 which authorized the LTFRB to determine the fare structure of TNVS providers. Subsequently, DOTR DO 2018 gave LTFRB full authority to regulate TNVS fares. So prior to these issuances, the P2 per minute travel time charge was allowed. Inspite of this, LTFRB chairman Martin Delgra imposed a P10 million fine on Grab.
The suspension of the P2 per minute charge has greatly affected driver income. According to news reports, the number of online drivers dropped by six percent from April to July. The allocation rate for the Philippines is the lowest in Southeast Asia. Our ability to allocate cars within the first few tries is down to 40 percent, which means that we are only able to allocate rides to four out of 10 passengers.
It was earlier reported that due to the lack of TNVS providers/drivers, matching of passenger and driver trips is being compromised. Average pick-up time (waiting time from booking confirmation to actual pick-up of passengers) has increased this July to eight minutes from a January-March average of seven minutes.
Our public transport system leaves much to be desired. These TNVS providers and TNCs have managed to serve us well but the LTFRB does not seem to appreciate the good that they have done. Uber already pulled out from the Philippines due to overregulation by the LTFRB. Grab is already feeling the pressure and soon, so will the other newly authorized TNCs.