Taxis will offer commuters the option of a fixed fare, that could fluctuate according to demand, from as early as next week. Four operators with a combined total of 9,900 taxis have tied up with ride-hailing app Grab to offer 'dynamic pricing' similar to that of private-hire car services. The four companies - SMRT, HDT Singapore Taxi, TransCab and Premier - were given the green light by the authorities yesterday to offer such pricing.

Commuters can opt for taxis and dynamic pricing through a section on the Grab app called JustGrab. They have the option of accepting or rejecting the ride, or booking a cab with a metered rate. Grab did not give details, but it is understood that once a ride is accepted, a private-hire car or taxi is sent to the commuter, depending on which is nearer. The operators will continue to offer their metered fare rates for both street hails and bookings via their call bookings and apps.

TransCab's General Manager Jasmine Tan said the new option will help it 'stay competitive' with the private-hire car business. GrabTaxi Singapore Head Melvin Vu added, "The current taxi fare model does not account for real-time passenger demand and driver supply, which often means that passengers pay a surcharge even when there are many available taxis in the vicinity."

Private-hire car services by Grab and Uber, which offer dynamic pricing, have become popular of late. Some book these cars when they cannot get a taxi during peak periods and prefer private-hire cars that are generally cheaper than taxis when there are surcharges. But such a pricing structure has drawn flak for being exorbitant during periods of high demand.

ComfortDelGro, the biggest firm with 60 percent of the market share, said it will not roll out dynamic pricing for now. Instead, it will introduce a 'flat fare structure', similar to its metered fares for trips booked via its mobile app. It did not explain how this will work, but said that it will be rolled out in two to three weeks.

Commuters and experts have raised various concerns about dynamic pricing. Dr. Park Byung Joon, a transport expert at the Singapore University of Social Sciences, said such pricing might aggravate the problem of cabbies hiding and waiting for bookings during periods of high demand. Freelance writer Joy Fang, 31, expressed concern that cabbies will be motivated to drive only when fares are high. She said, "Commuters who depend on taxis as an essential service, such as the elderly who have hospital appointments, may be unable to afford a taxi because of the surge pricing."