Did Grab 'illegally' charge its riders higher fare?

MANILA, Philippines (UPDATED) – Amid allegations of charging illegal fares, Grab Philippines maintained that it has always been "transparent" about its fare scheme.

In a statement on Wednesday, April 11, Grab spokesperson Leo Gonzales said that the P2-per-minute charge was initiated "when Grab reviewed its pricing structure in June 2017," and "was integrated to the existing per kilometer charges and is not added to the upfront fares."

"Per minute charges remain part and parcel [of] Grab's fare structure today, and we have continuously been transparent about this truth," Gonzales added.

The Land Transportation Franchising and Regulatory Board (LTFRB), however, said the last fare schedule it had approved for Grab, in December 2016, was not in reference to any "time travel rate." 

A congressman says Grab therefore owes its riders a refund. 

Why does Grab have to explain? Grab made the statement in response to the claim of PBA Representative Jericho Nograles that it was illegally charging its customers on top of its government-approved pricing scheme.

In December 2016, the LTFRB regulated transport network companies' fares, allowing Grab to charge a flagdown rate of P40, with an additional P10 to P14 per kilometer travel.

The order also put a cap on surge pricing to only twice as much as the normal fare.

What does the law say? According to Commonwealth Act Number 146, fares that are "just and reasonable" are approved "only upon reasonable notice to the public services and other parties concerned, giving them a reasonable opportunity to be heard and the burden of the proof to show that the proposed rates or regulations are just and reasonable shall be upon the public service proposing the same."

It didn't happen in Grab's case. In an earlier interview with Rappler, the transport service network said no hearings were conducted prior to its implementing the charge of P2-per-minute in every ride. The LTFRB was only "made aware" of it, said Grab PH head Brian Cu. 

On Wednesday, Gonzales said, "[W]e corresponded with the LTFRB to present these changes and was given the opportunity to present in full our business model, supply and demand models, and pricing structure during one of the Technical Working Group meetings in late July 2017."

In a statement, LTFRB Chairman Martin Delgra III said that the now-amended December 2016 order "was the last issued by board and still stands." In that order, "there is no mention of time travel rate."

Should Grab's accreditation be cancelled? According to Gonzales, the P2-per-minute charge was conceptualized to assure Grab drivers that they "would have a greater chance of making ends meet" despite heavy traffic congestion in the metro. 

"At the end of the day, Grab seeks to always ensure a balance in fare to benefit both our passengers and drivers. We owe it to our riding public to remain truthful and transparent," he said.

But Nograles said that Grab owed its riders a refund.

"They are liable for a refund. With Uber now being absorbed by Grab, we're looking at the potential of 2.8 million rides per week and all of them charging P2 per minute. This is the problem when there is a monopoly," he told Rappler in a phone interview on Tuesday, April 10.

On Thursday, April 12, the LTFRB issued a show-cause order against Grab, asking them to explain why its transportation network company accreditation should not be suspended or cancelled over the allegations.

By April 16, patrons of ride-hailing services will be left with only Grab as their choice, as LTFRB ordered Uber to close down. – Rappler.com

Aika Rey

Aika Rey is a business reporter for Rappler. She covered the Senate of the Philippines before fully diving into numbers and companies. Got tips? Find her on Twitter at @reyaika or shoot her an email at aika.rey@rappler.com.

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