Transport fares reduction: For better or for worse?

I refer to the reports “Public transport fares to go down by 2.5% from Jul 3” (Channel News Asia, 20 April) and “Lower fares from July” (Straits Times, 20 April).

The former report states that “overall public transport fares will dip by 2.5 per cent from 3 July, but savings will vary from commuter to commuter.”

“The Public Transport Council, in its latest annual fare review, said the 2.5 per cent reduction arises from the fare revision formula, which pegs adjustments to national inflation and productivity figures. As Singapore was in a recession last year, the formula gave rise to a rare fare reduction. This followed a fare freeze the year before,” it said.

I am somewhat puzzled as to why a recession year which gave rise to a rare fare reduction can produce an outcome in which one third will have to pay more.

Since the CNA report said “With the changes, the PTC said that two in three commuters will see a reduction or no change in their weekly public transport expenditure”, does it mean that some of the remaining two-thirds who do not have to pay more, may actually pay the same and thus derive no savings at all?

If this is the case, then quite a significant proportion may not be better off.

To top it off, even those who probably would be least able to shoulder any increase – like the estimated one in three senior citizens – will end up paying more.

The report also states: “When the changes kick in, seven in ten enjoying concessionary travel will see savings.” Why do we almost always invariably revise fares in such a way, that even some of the elderly, children and students are penalised?

What is perhaps even more puzzling is the increase in boarding charges. According to reports, boarding fees for buses will go up two cents to 71 cents, while train boarding fees will rise three cents to either 71 cents or 76 cents.

So, does this mean that some people, particularly those who travel shorter distances, will end up paying as much as four per cent more (76 cents divided by 73 cents) the moment they board public transport?

Starting July, fare bands will also be narrowed from the present distance of about 2.4km to 800m, which will result in smaller but more frequent fare jumps. The report added that “on a typical journey without transfers, this will result in higher fares.” Does this mean that those who now typically try to save on transport costs by taking a direct bus ride, without transfers, may end up paying more?

What kind of post-recession fare reduction exercise is this, when it appears that the most vulnerable in society – such as the poor who don’t transfer between rides to save on fares and senior citizens who try to minimise transport costs by taking short trips – may end up paying more?

In other countries, when public transport fares are reduced, post-recession or otherwise, generally all commuters would pay less.

Perhaps it is in line with our “Uniquely Singapore”, that fare reductions are almost always so complicated that all kinds of people may end up paying more.

What does the statement “Bus and train fares will be reduced by 2.5 per cent from July 3 when the Public Transport Council (PTC) introduces a new distance-based fare system” mean?

Does it mean that on the average commuters will pay 2.5 per cent less? Is it possible to show us how this was derived?

Both reports quoted PTC chairman Gerard Ee as saying: “The decision comes after careful deliberation and scrutiny of the impact on both the transport operators and commuters.” He added that operators will bear “the larger part of the costs”. The Straits Times also reported that the latest fare revision, which is valid for a year, will result in a combined loss of $32 million in annual revenue for SBS Transit and SMRT Corp.

But this has become an almost ritualistic piece of rhetoric, thrown out every time fare changes are made.

SMRT has claimed that it is “committed to further assist commuters who require financial assistance through its various programmes.” Just how is SMRT going to differentiate between the needy who are adversely affected by this so called “fare reduction”? In my view, it should rightly be called a “fare adjustment” instead.

Let’s take a closer look at the statistics before we decide if SMRT are really thus committed.

SMRT’s after tax profits have been rising almost every year in seven of the last eight years – with the exception of fiscal year 2006 – from $56.8 million in FY2002 to $162.7 million in FY2009. This represents an annual increase in profits of about 14 per cent per annum, which has been achieved despite the fare reduction and freeze during the recent recession.

As for SBS Transit, their after tax profits grew from $34.6 million in 2002 to $54.6 million in 2009.

Are there any public transport operators in any country in the world that makes such increasing profits?

Such is the never ending story of public transport in Singapore. Perhaps it is best summarised as “some pay more, some pay less, but always earn more.” Make sense?

By Leong Sze Hian

Notify of
Inline Feedbacks
View all comments