TNCs: A welcome disruption while waiting for long-term solutions

His daily travel across the metro has gotten worse of late for Christian Marcelo, a 22-year-old freelance writer who used to commute from his home in Fairview—“Farview,” he quips—in Quezon City to his former workplace in Mandaluyong City.

Normally, the 21-kilometer ride should just take him at least 40 minutes by bus or UV Express shuttle. But the construction of the Metro Rail Transit Line 7 along Commonwealth Avenue, which started in March, has since been forcing him and thousand of others to endure hours in traffic bottlenecks.

The fumes and the noise, the unbearable heat, the draining experience of taking public utility vehicles have begun to take their toll on his health, which is why he started using ride-hailing apps like Grab to reach his destination with his composure and sanity still intact.

But while app-based vehicles offer comfort and alternative routes, nothing still beats having an efficient public mass transport, he said. “I have found a very convenient option. But we can have a more viable, long-term solution if the entire system is improved and properly managed.”

Over the past two years, since they first hit the streets in the last few months of the Aquino administration, vehicles operating on the platforms of transport network companies (TNCs) have provided a convenient—albeit costlier—choice for commuters to get from A to B in the heavily congested capital.

They have proven to be a game-changer in the Filipino riding experience, a welcome disruption amid the scarcity of public rides during rush hour and the added aggravations of encountering with choosy, rude or cheating taxi drivers.

At present, a total of six TNCs are authorized by the government to operate, with Grab remaining as the dominant player, having acquired the Southeast Asian operations of rival Uber in April this year. The five other companies were later accredited by the Land Transportation Franchising and Regulatory Board (LTFRB) supposedly to prevent a monopoly of the sector.

As described in industry parlance, they “maximize transport resources” through ride-sharing, as in the case of Grab and Hype, or tap an existing pool of taxi drivers as way to revitalize their industry, like in the case of Hirna, GoLag and Micab. The sixth accredited player, Owto, works on an app that arranges one trip per booking and has yet to offer carpooling services (multiple passengers, multiple stops) similar to that of Grab and Hype.

Great equalizer

For Willie Bercasio, GoLag spokesperson, ride-hailing platforms see themselves “filling in the demand for mass transport… and helping set the direction for the transport sector.”

“Until such time when the total transport infrastructure for public commute is completed, this will be the role that TNCs have to play,” Bercasio said.

“We like to believe that the solution to traffic congestion is innovation,” added Coco Mauricio, Hirna president. “This is where ride-hailing apps come in as a technology-based solution… It’s the great equalizer.”

Of the players currently in the market, Grab and local apps Hype and Owto offer TNVS or transport network vehicular services (a ride classification coined by the LTFRB). This means that the booked vehicle is privately owned either by the driver or by another person listed as the operator.

All three companies offer incentive schemes and commission rates to entice more people to drive for their platform.

“It’s a way for them to earn sustainable income,” said Jennifer Silan, Hype spokesperson. “The beauty of this lies in creating more jobs and providing affordable and convenient rides for our countrymen.”

Opportunity

Shortly after Grab took over local Uber operations, the former found itself being swamped by as many as 600,000 to 800,000 bookings a day.

The situation presented an opportunity for new players like GoLag (short for Go Laguna), Hirna (mainly based in Davao City) and Micab (based in Cebu). But instead of tapping private vehicles or adding to their road-choking volume, they encourage taxi drivers already plying the streets to use their app to get more rides.

“There’s no shortage in demand; the problem is the supply,” Micab chief executive officer Eddie Ybañez said. “By reviving the taxis through app-based platforms, we could unite the taxi sector into providing better services for the passengers.”

These province-based TNCs also address the dearth of taxi cabs in their respective areas, where passengers mostly have to rely on jeepneys and tricycles. Having taxis in these locations would make it easier for travelers to cover their so-called “last mile”—or the last stretch from the bus or airport terminal to their homes, Bercasio said.

Fare structures

Each TNC has its own fare structure approved by the LTFRB, while TNVS share common fare components: a booking fee of P40, a P13 to P15-per-km rate, a P1.25 to P2-per-minute travel rate, and, when demand shoots up, an allowable price surge of up to two times the regular fare.

Those using taxi-hailing apps, on the other hand, follow the recalibrated fare structure currently being implemented by the LTFRB: P40 base fare, P13.5 per km rate, and a P2-per-minute travel rate.

The last few months have seen protracted arguments between Grab and the LTFRB over how much freedom can be given to TNCs in setting their own fares. But all agree that having a uniform fare matrix would help keep fares affordable for the riding public.

There’s also a “problem” arising from the current state of affairs wherein the majority of the 50,000 drivers on LTFRB’s master list are partnered with the leader Grab. With Grab offering substantially better incentives compared to those from smaller, homegrown competitors, it could “corner the market” not just in terms of riders but drivers as well, Bercasio said.

Hype thus filed a petition in the board in August to oppose the renewal of Grab’s accreditation for allegedly deceiving its drivers with “unsustainable” incentives and for flouting LTFRB regulations.

The Inquirer sought Grab’s comment on the petition but has yet to receive a response as of writing.

“It’s really difficult to go head-to-head against a giant like Grab,” added Owto founder Paolo Libertad. “That’s why it’s important for the government to nurture local firms like us, to help us not to get bullied, by providing measures that protect us.”

Long-term solution?

Like Marcelo, the weary commuter from “Farview,” traffic expert Dr. Primitivo Cal said TNCs should not be considered the long-term solution to Metro Manila’s traffic problems.

For one, TNVS can’t even be used for paid transport under Republic Act No. 4136, or the Land Transportation and Traffic Code, explained Cal, executive director of the University of the Philippines Planning and Development Research Foundation.

The law, he said, contemplates a system where all motor vehicles must be registered under clear classifications. TNVS units that operate under Grab, Hype and Owto fall under “private passenger automobiles,” which by law “cannot be used for hire under any circumstances and shall not be used to solicit, accept, or be used to transport passengers or freight for pay.”

Though the Department of Transportation has issued Order No. 2015-11 recognizing TNVS as a new form of service “to address the large demand… in expeditious and responsive ways,” Cal said it cannot supersede RA 4136.

He added that the government should have fixed the legal framework so as “not to cloud its true character — TNVS is not a public utility.”

The Metropolitan Manila Development Authority has also cited the rise of TNVS as a major—if not the newest—
cause of road congestion especially on Edsa. Data from the Land Transportation Office showed that the dawn of ride-hailing apps had seen a surge in the number of newly registered private vehicles, which raised the total to 186,000 in Metro Manila alone.

The carpooling services offered by TNCs “do not have a significant impact on solving the traffic problem,” Cal stressed. “Ride-sharing is a good idea in that it deals in optimizing resources. But (it) cannot really address the full requirement and cannot take the place of mass transit.”

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