LTFRB orders Grab, Uber surge cap

Metro Manila (CNN Philippines) — The Land Transport Franchising and Regulatory Board (LTFRB) imposed on Grab and Uber a cap on the surge fares, as per an order following its en banc hearing with the two transport services Tuesday.

"The maximum allowable price surge on the fare shall be twice the rates for time covered and distance travelled excluding the base fare," the order read.

It also directed Grab Philippines to "lower its fare per kilometer from ₱12.00 - ₱16.00 to ₱10.00 - ₱14.00 depending on the type of vehicle used."

This comes as the LTFRB issued warnings to transport network companies (TNCs) Grab and Uber after the services came under fire for unreasonable surge pricing over the holiday season. A surge in the price of the fare is said to reflect the demand for transport and the available supply of cars.

As the Christmas rush set in, patrons of the two vehicle services, which are a popular alternative to public transportation, reported surge prices from as low as ₱2,000 to ₱28,000 per ride.

The order will remain effective until further notice from the Board.

The TNCs were also instructed to file position papers on the liability and accountability of their companies as well as reasonable determination of fees within ten days.

TNCs to comply

"I have talked to Grab and Uber separately in at least four occasions over the past five months and they have agreed to that policy that they are willing to submit to a level of regulation," LTFRB Chairman Martin Delgra III told The Source on Tuesday prior to the hearing.

Grab announced in the same interview that it will already cap its surge rate to twice the regular rate.

Grab Philippines country head Brian Cu also told CNN Philippines' The Source prior to the hearing that it would also lower the fare per kilometer to reflect the existing traffic situation.

"Whereas before, prices could surge to two-and-a-half times, 2.8-x of the fare, we agreed to place a cap at the 2x limit and lower the per-kilometer fare," Cu said in the interview.

They will be coordinating with their engineers and counterparts in Singapore to effect these measures, Cu added.

Cu said that "placing a ceiling on (prices) is something that can be done manually."

Uber Philippines did not directly respond to the order of LTFRB, although it already agreed to a price cap that will be effective until January next year.

In a statement that followed the hearing, Uber Philippines General Manager Laurence Cua urged the LTFRB to lift its suspension on Transport Network Vehicle Services.

"682,000 riders took an Uber ride over the past three months, an increase in ridership by more than 119 percent since June, yet the LTFRB has maintained its suspension on TNVS applications during the same period," Cua said.

Supply and demand

Cu said that the surge, which is computed by an algorithm, also looks at factors like supply and demand.

"So on the 24th (of December), a lot of drivers were on holiday... but passengers continued to book," Cu explained. "So that could have been one of the reasons why the system automatically padded the prices."

Cua also cited the shortage of drivers as a reason for the surge in a separate statement.

Cu clarified that the cars visible in the map of the Grab application are not necessarily available vehicles, but those that may be completing trips nearby.

In turn, Delgra said that this feature "creates a wrong impression" and riders might mistake the supply to be high.

Cu said that they are working to resolve that feature with their engineering team and fixing it "should not be impossible."

He assured that Grab had an internal mechanism that monitored and hold accountable drivers who shut off the app to lower supply and manipulate prices.

LTFRB to scrap moratorium

Delgra also confirmed that the LTFRB will scrap the 13-year-old moratorium on bus franchises by "very early next year."

"We have been working even during this Christmas season with the [Department of Transportation] that we're going to lift the moratorium pretty soon with the new omnibus franchise policy," he said.

Bus franchises were suspended due to allegations of corruption within the LTFRB concerning the issuance of the franchises.

CNN correspondent Makoi Popioco contributed to this report.