Point-to-point fares, earnings have ‘moderated’ as supply outstrips demand, says Amy Khor
DRIVERS’ earnings in Singapore’s point-to-point (P2P) transport sector – including taxis and privatehire cars (PHCS) – have fallen, as supply has risen more than demand, Senior Minister of State for Transport Amy Khor said in Parliament on Tuesday (Sep 10).
In the second quarter of 2024, the number of active PHCS and taxis rose 8 per cent compared to the year-ago quarter. Yet, the average daily number of P2P trips increased only 1 per cent in the same period.
“As a result, P2P fares and consequently drivers’ earnings have moderated,” said Dr Khor.
She was responding to questions from several Members of Parliament on the sector’s long-term sustainability, supply trends and drivers’ earnings.
Higher fares
After Covid-19 measures were eased in March and April 2022, demand for P2P services rose, leading to higher fares from surge pricing. Operators had also raised fares to help drivers with higher costs.
The higher fares drew more drivers into the market – causing the rise in supply that was not matched by a rise in demand.
Said Dr Khor: “From a peak at the start of 2023, average surge prices and net ride-hail fares had declined in the first half of 2023, back to levels we saw in the first half of 2022.”
Tampines GRC MP Desmond Choo, who is also assistant secretary-general for the National Trades Union Congress, further asked how the Ministry of Transport (MOT) could support P2P drivers in times of protracted low fares.
Taxi and PHC drivers had told the labour movement that “over the last six months especially, their earnings and bookings could have dropped by more than 30 per cent”, said Choo.
Reflection of market forces at work
In response, Dr Khor reiterated that the decline of earnings was due to the supply of drivers rising faster than demand for trips.
But this, she noted, has been a reversal of the post-covid situation, where demand had increased significantly but many drivers had yet to return, pushing fares up.
“So really, P2P fundamentally is a demand-responsive transport mode, and changes in fares are a reflection of market forces at work,” she said.
And while average fares may have declined, there are also fluctuations across the year, she added. Fares rise when there are major events such as concerts, and decline during the school holidays when many Singaporeans are abroad.
To support drivers, MOT and the Land Transport Authority instead enable drivers to make informed decisions on when to drive and what rides to take, she said.
Earlier in her response, Dr Khor reiterated that the MOT does not set fares for the sector, as these are determined by the operators based on market competition.
Nor does it cap the number of drivers; instead, it allows this to “move in tandem” with demand and price signals.
“The appropriate level of supply for the sector depends on the level of commuter demand and the fares they are willing to pay,” she said.
LTA data as at July 2024 indicated that the private-hire car population reached an all-time high of 85,881, up from 18,847 in 2014. The taxi population stood at 13,343, less than half its 2014 number of 28,736.