Grab Philippines allotted P100 million a month to subsidize fares to ensure decent earnings for driver partners after the P2 per minute component was suspended.
“Based on our computations, a TNVS driver needs to make at least P330 per hour to be able to properly provide for his family’s needs and to cope with the traffic, high fuel and vehicle maintenance costs,” Brian Cu, Grab Philippines country head, said.
The fare subsidy scheme was implemented Monday.
“Since P2 per minute component was suspended, we received a lot of painful complaints from our partners that their earnings are not sufficient anymore to make a decent living. That’s why we decided to step in,” Cu added.
The ideal scenario for TNVS drivers is for them to earn at least P5.50 per minute or P330 per hour.
The subsidy ensures drivers in getting the ideal fare rate as computed by Grab’s system.
“For example, if a ride from Makati to BGC takes an hour because of heavy traffic despite short distance, and the fare is computed at P120 only, Grab will return to the driver the P210 difference to make sure he made P330 for that one-hour trip,” Cu said.
Cu added only riding hour with passengers would get a subsidy. He also clarified that subsidy was different from incentives.
“Subsidy is better since you get the difference in fares on all “lugi” trips, while incentives can change from time to time and is only a bonus for drivers who hit a certain number of rides,” he said.
With the fare subsidy for drivers, Grab hopes its TNVS partners will be more willing to take on more trips as demand doesn’t get any less.
An average of 600,000 bookings increases to up to 800,000 during peak hours, while TNVS supply in Grab’s platform remains at 33,000.
“With guaranteed earnings, we hope that this subsidy will also urge our partners to be more confident that they will make money for any trip they get and continue providing quality service to the riding public,” Cu said.
“The subsidy will run as long as it’s needed and for as long as we have resources to do so,” he added.