Recently, there was a furore over Wendy’s in the United States announcing that it was introducing dynamic pricing at its restaurants. Customers responded angrily, misunderstanding dynamic pricing to mean surge pricing (higher pricing at peak demand times). Wendy’s clarified that it was not raising prices but would instead offer discounts at low-volume times.

This incident raises the relevant question of whether surge pricing is a fair practice, when it comes to services that are widely used and depended on by citizens.

In Singapore, we experience surge pricing in ride-hailing services (Sun will set on taxi trade unless drastic changes are made, March 11).

Ride-hailing services today have grown much larger than the traditional taxi service, which we can all agree is an essential service for citizens, given that public transport still can’t get us to every place we want to get to easily.

Before ride-hailing, we considered taxis as a third leg of our public transport system, which is why their prices were regulated to begin with.

But today, even as private ride-hailing capacity far outnumbers taxi capacity, surge pricing often reaches ridiculous levels with no real regulatory cap on it.

We would be outraged if, for example, supermarkets charged more for groceries bought during high-demand periods. Or if hawker centres charged more during peak hours. So why is it we tolerate such surge pricing by ride-hailing services?

It’s not as if ride-hailing companies have a fixed vehicle capacity. They essentially operate like a cloud service with access to more vehicles owned by individual drivers.

Even without surge pricing, individual drivers would quickly realise that there are peak hours when they are more assured of passengers and can choose to drive more during those hours.

So why raise prices during those hours when there’s extra capacity available to fill the gap?

Rahul Patwardhan