GoTo, the parent company of Gojek, has responded to the Indonesian Ministry of Transportation’s discussions regarding a potential 15% increase in ride-hailing fares.

Ade Mulya, Director of Public Affairs and Communications at GoTo, confirmed that the company is reviewing the proposal in collaboration with the ministry.

He noted that Gojek aims to maintain competitive fares that meet regulatory standards while considering consumers’ purchasing power and current economic conditions.

The goal is to sustain demand, support drivers’ earnings, and maintain the ecosystem.

🔗 Source: CNBC Indonesia

🧠 Food for thought

1️⃣ Ride-hailing price sensitivity threatens potential benefits of tariff increases

Research from the Research Institute of Socio-Economic Development (RISED) shows that over 70% of Indonesian ride-hailing customers would stop using services if fares exceed Rp 2,800 (20 cents) per kilometer 1.

This price sensitivity explains why GoTo is conducting a “comprehensive study” with the government before implementing the proposed 15% increase, as significant fare hikes could dramatically reduce ridership and driver earnings.

Economic analyses indicate that fare increases could disproportionately impact lower-income users, potentially raising their transportation costs to 27% of monthly income, a substantial burden that could drive customers to alternative transportation options 1.

The government’s zone-based approach to regulation, with different tariff ranges for Sumatra/Java/Bali (Zone I), Jakarta/surrounding areas (Zone II), and eastern Indonesia (Zone III), reflects an attempt to balance regional economic differences while maintaining service viability.

2️⃣ Platform fees remain the elephant in the room amid tariff discussions

While the proposed 8-15% fare increase aims to improve driver welfare, driver organizations argue that without addressing platform commissions, which currently exceed 20%, the increases primarily benefit the companies rather than drivers 2.

The Indonesian Transport Workers Union (SPAI) has specifically called for reducing application fees from 20% to 10%, highlighting that fare increases alone don’t address the fundamental issue of how revenue is distributed between platforms and drivers 2.

This tension reflects a persistent challenge in the ride-hailing industry, where driver protests have repeatedly focused on the gap between gross fares and net driver earnings after platform cuts 3.

Historical data shows that despite previous fare adjustments, driver income concerns have remained, with reported earnings drops of up to 67% during the pandemic despite increased service demand 4.

Recent GoTo developments