The supply of taxi and private-hire car drivers in Singapore has increased significantly, while passenger demand has seen only a slight rise, leading to moderated earnings for drivers, according to Senior Minister of State for Transport Amy Khor. Over the past year, the number of active private-hire cars and taxis rose by 8%, but the average daily number of passenger trips increased by only 1%.
Background
Khor addressed these issues in parliament on September 10, responding to questions about the point-to-point transport sector’s supply and demand dynamics and its long-term sustainability. The imbalance between the growing number of drivers and the relatively stagnant passenger demand has impacted the earnings of those in the sector.
Fares back to 2022 levels
Point-to-point fares have returned to levels seen in the first half of 2022. The average surge prices and net ride-hail fares peaked at the start of 2023 but declined in the first half of that year. This fluctuation in fares reflects the changing dynamics of supply and demand in the market.
Seasonal earnings
Khor noted that fares are subject to seasonal fluctuations. Higher demand from locals and visitors during major events like the Taylor Swift and Coldplay concerts, as well as festive periods, led to increased fares. Conversely, demand tends to decline during school holidays when many Singaporeans travel overseas.
Authorities do not set fares
The authorities monitor the sector but do not set fares, leaving pricing to operators and market competition. This approach means the authorities “do not cap the number of P2P (point-to-point) drivers,” allowing supply, demand, and prices to be determined by market forces. The appropriate level of supply for the sector depends on commuter demand and the fares they are willing to pay.
Drivers earnings dipped 30 per cent
Khor emphasised that the dip in earnings needs to be taken “into context,” noting periods of high demand, such as at the end of the pandemic in 2022. Desmond Choo, a Member of Parliament for Tampines GRC, highlighted that some drivers reported their earnings have dropped by over 30% in the past six months. In response, Khor mentioned that the Land Transport Authority (LTA) will continue to explore ways to reduce operating costs, such as extending the statutory lifespan for taxis, a move announced earlier in 2024. She also pointed to various government programmes to support drivers considering alternative forms of employment.
Future implications
The current imbalance between the supply of drivers and passenger demand raises questions about the long-term sustainability of the point-to-point transport sector. As the authorities continue to monitor the situation, the focus will likely remain on finding ways to support drivers and ensure the sector’s viability. The LTA’s efforts to reduce operating costs and government programmes aimed at helping drivers transition to alternative employment forms are steps in this direction.
