EDSA III: The case against surge pricing

Cover art Erka Inciong

Words by

Founder and CEO, Micab

Though we are spread across 7,500 different islands, Filipinos are united by our shared sense of fairness. Case in point: If we travel out of town to a province where we don’t speak the local dialect and we buy a fruit at the palengke for P40, only to find out later that it was actually priced at P30, we would likely be outraged. The 10-peso difference isn’t the concern—it’s the principle of the matter.

People should be charged the same price for the same product.

Since most Filipinos, myself included, have likely been a victim of price discrimination at some point in our lives, we are all adamantly against it. And that’s why I find the tacit acceptance of this practice in a business category that so many of us use so surprising.

We’ve all seen the terms “surge pricing” or “dynamic pricing” pop up on our ride-hailing apps. These schemes are said to balance out higher demand with higher prices. In reality, these terms are used to mask what is really going on: price discrimination. Plain and simple, considering fares already factor in time and distance.

Let’s go back to the usual justification, that ride-hailing companies change their pricing based on demand. I would argue this is even worse, because it targets whole swathes of people.

Say demand spikes for a particular ride-hailing company every evening between the hours of 7 p.m. to 9 p.m. The company’s fares thus in turn rise between 1.5x and 2x the cost of a normal fare. If you’re a Filipino who has to commute to work at this time—perhaps you are a call center agent—you would have to regularly pay 2x what a Filipino who goes to work at another time does. You get the same product, the same service, but by virtue of being a call center agent on the graveyard shift, you have to pay double.

Why do we stand idly by as this happens? We would not tolerate this price discrimination at the mall, the grocery, at a palengke—so why do we tolerate it on our roads?

EDSA I and EDSA II were fundamentally about fairness. We took to the streets to express outrage over perceived inequalities in how our cities were governed. But what happens now that the inequalities are already there, plying the streets, out in the open, governing how and when we can move across our cities?

To some, this analogy may sound like a stretch, but it’s one that I stand by. I think all Filipinos deserve to pay the same price if they are both going from point A to point B.

Over the last few months, there have been a slew of infographics circulating online comparing old and new ride-hailing players across several parameters. These include areas served, base fare, per kilometer charges, cancellation fees, and price surges. Based on these parameters, I’ve seen netizens debate on social media about them, but few ever really get the full picture of these ride-hailing companies.

These infographics make it seem as though their product features are constant, when this is really not the case. The figure in the price surge field may read 1.5x or 2.0x, which makes it seem static. A more accurate representation of price surge would be a GIF-like effect where the numbers change, much like bars on a slot machine. When you book a ride on a surge fare, you pull the lever, and are forced to pay whatever value it lands on. This is not portrayable in a simple infographic, of course—such is the way with surge pricing. It defies description.

I understand there are no simple answers here. I also understand that ride-hailing platforms use surge pricing in an effort to get more cars on the road for their passengers. But as the local mobility and transportation sector matures, it’s time for industry leaders to step up and mete out better policies for all stakeholders.

The blockchain community in the Philippines recently launched several professional associations, and I believe we should follow suit. We can develop our industry and seek to establish protocols and best practices for even the most contentious issues, like surge pricing. In the end, this is not a rally against surge pricing, but a call to elevate our industry by asking the tough questions no one wants to ask, but we all must one day address.

Like the passengers we serve, the industry leaders in transportation and mobility must also think about where we want to go and how we will get there.

Eddie Ybanez is the founder and CEO of Micab. Based in Cebu, he is a “hacker” by training and by heart.