How about ‘dynamic pricing’ for highway tolls?

 

Happy Chinese New Year, everybody! May the Year of the Dragon be a great year for all Malaysians!

I drove back to Penang for a short trip this week. Given that I could choose my time of travelling, I happily managed to miss the worst of the holiday traffic. And as I returned to KL when most people were still heading out, that journey too went well.

The journeys actually went better than well – it was brilliant because both legs were toll-free! Oh, the joy of passing through the toll booths to see the display saying “RM0.00”!

Long may that continue. Or perhaps not. Unfortunately, this “free gift” is a double-edged sword. It’s not free at all by any means.

First, I doubt if it’s the toll concessionaires giving away these free travels out of the goodness of their heart. I’m sure the toll charges are being paid for by the government, because otherwise it wouldn’t be fair to the toll concessionaires, even if there are legitimate questions about them having any heart.

So, the cost is coming out of “government’s money”, which, in spite of the many crocodiles feasting on it before it can trickle down to us rakyat, still means something.

Whatever money left after the crocodiles have had a go can still pay for services such as, you know, keeping people alive in public hospitals.

Then there’s the unintended consequences of extra travels that wouldn’t have happened had there not been a toll-free period – such as that done by me. I actually did have a good family reason for my travels, but if you are to push me, I’d admit it could have waited.

For example, I could have waited for the next festivity, which would be Hari Raya Aidilfitri in a handful of weeks’ time, when I bet there will be free travels on tollways again!

Plus, this is really unfair to so many fellow Malaysians who travel on non-toll highways and roads. Given that toll highways are mostly along the more prosperous parts of the country, it seems the more well off you are – including being able to afford a car and paying for fuel for long trips – the more perks you get too.

I expect that at any moment now Sabah and Sarawak will start agitating about their contributions to the federal tax coffers being enjoyed only by the elite on the peninsular west coast! And they’d have a good point too.

But I am probably more offended by the sheer laziness inherent in the toll-free decision. It’s clearly “populist”, which means it’s yet another “bribe” to our rakyat to buy their affection, or at least approval. But at least it could have been done in smarter ways.

For example, why give a 100% toll discount? Why not just a discount of say, 50% during daylight hours? Nice as it is to have freebies, why should we ever expect our expenses to be fully picked up by the rakyat? 50% sounds fairer and cheaper too if you ever need to offer such “bribes”.

And why not incentivise people to travel during low periods, such as at night? Perhaps here is where we could get a 100% discount. It would help to spread out the massive crawls we experience every festivity, and help the businesses serving motorists along the expressways too.

Why not spread the period when the discounts apply, again to incentivise motorists to spread their travels so we won’t have the usual infamous holiday traffic crawls?

The days when people do their return travels are more difficult to pin down, but analysing the data means we’d get better at predicting it every year.

What about giving more discounts to those who have spent more on their tolls throughout the year, such as the people who travel day in day out on tollways, often because they have no real choice? Other businesses reward their heavy spenders – tollways used to do that too in the past, but I don’t see that happening now. Giving them these “angpows” during festivities would be much appreciated.

The key point is simple – the tollways are a product, just like any other product, whether fast food hamburger or a mobile phone subscription or a credit card. All the other things smart businesspeople do to sell hamburgers etc, can also apply to toll roads.

Apart from better marketing of this tollway “product”, a core aspect of any product is its pricing. In fact, given that travelling on an expressway is no longer a luxury but rather a necessity that has been commoditised, this is exactly where smarter pricing can be made to play.

We have seen instances of “dynamic pricing”, initially popularised by low-cost airlines, becoming mainstream and now being used by all airlines. It’s about constantly monitoring the traffic usage and constantly offering prices that reflect capacity and utilisation and also encourages “desired” behaviours, such as travelling during off-peak periods.

All of these are possible and implementable. Whatever reasons given – systems and technologies and contractual agreements between the government and the tollway concessionaires, can quite easily be worked out by smart people. There’s nothing really unique about tollways compared to other products.

Its time for the lazy concessionaires marketing people to get off their behinds and come up with something unique and cool. They can easily come up with pricing that may even encourage more usage, but also help to clear congestion during peak periods.

So, whichever government ministry that “owns” the tollways – and sorting this out isn’t as easy as you might think – please show a little of the dragon spirit in the coming year, and push for some innovations that can be a win-win-win, for the concessionaires, the motorists and society at large.

Meanwhile, Gong Xi Fa Cai, drive safe, don’t be a dragon on the road, and come back home and make some noise about this. - FMT

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.