While its approval of the public transport operators’ (PTO) application to hike fares may draw criticisms, it is the Public Transport Council’s (PTC) inability to convince the public of the reason for the hike that is erasing the credibility of the 16-member council.
The operators had submitted their applications on 19 December 2013.
They were approved on 16 January 2014, less than a month later.
The PTC’s thumbs up for the 3.2 per cent hike in public transport fares, and coupled with a slew of concessions for various groups of people, was praised by the Transport Minister for having “struck a good balance” in its decision.
The PTC had also apparently sought to assuage the expected public backlash by not approving the full 6.6 per cent rise in fares which the PTOs had applied for.
However, the public backlash was more pronounced than perhaps the PTC had expected, with many members of the public flooding the Transport Minister’s Facebook page with more than 860 comments since the announcement was made on 16 January. [See here.] The majority of the comments, like those elsewhere on theInternet, expressed how commuters were aghast that despite the frequent breakdowns and lapses in service, and the healthy profits that the PTOs continue to make along with generous billion-dollar government handouts, the PTC had still allowed the fare hike.
In response to the widespread unhappiness which, incidentally, mostly went unreported and ignored by the local mainstream media, the PTC tried to explain its decision and to address the criticisms.
On 21 January, 5 days after the hike was announced, the PTC said that the “fare hike and breakdowns are separate issues”.
Chairman of the PTC, Gerard Ee, was reported to have said that while the operators are still profitable, “their finances would need to be healthy to maintain service reliability.”
Yet, at the same time, Mr Ee insists that the “fare hike and breakdowns are separate issues.” Some commentators have found this puzzling, given that the fare hike apparently is to sustain the profitability of the PTOs, which then would enable them to improve or “maintain service reliability” – as Mr Ee himself said: “… their finances would need to be healthy to maintain service reliability.”
Indeed, entrepreneur Nanz Chong-Komo, the founder of the ONE.99shop chain in 1997, took a dig at Mr Ee’s gaffe.
In a Facebook post, Ms Chong-Komo said:
“Someone has difficulty understanding the close relationship between consumer satisfaction, quality execution & price strategy in business. I am not “For or against” fare hike in this context but to say “separate issues” is not align with my understanding of practical business principle.”
It is quite clear that ComfortDelgro, the parent company of SBS Transit, and SMRT are both profitable and have, generally, always been so.
What is not profitable is a component of their overall business – the bus operations.
Indeed, in a report on TODAY on 17 January, it said that the bulk of the profits from the fare hike – which will total some S$53m – will go to fund the “financially ailing” bus operations.
“Bus operations will receive a S$48 million boost from the hike, while S$5.5 million will be allocated to MRT operations, under a new weightage in revenue allocation applied by the PTC,” the newspaper revealed.
In a report on 11 January 2013, the Straits Times reported that all of the various business aspects of the PTOs – except the bus operations – are profitable. [See here.]
“As a group, there is no doubt the companies are profitable,” the paper said. But their bus operations “are certainly loss-making.”
“SBS Transit, which runs about 70 per cent of the bus routes, ended its last financial year at $6 million in the red for its Singapore core bus operations. This excludes revenue from advertising.
“SMRT fared worse.
“It had an operating loss of $11.6 million for its local bus operations at the end of its last financial year.”
The argument from the PTOs is that the public should not confuse the companies with the individual component parts, and that the public should see each one separately.
However, as the Straits Times reported:
“National University of Singapore’s transport economist Anthony Chin points out that it is not possible to separate bus operations from the group’s overall operations.
“Bus operations are meant to feed into the train system which forms the backbone of Singapore’s transport network. They are not intended to be profitable on their own, he said.”
The PTC (and the government, for that matter) seems to see it differently from Mr Chin. The Council’s view seems to be that each part of the business must be profitable, or self-sustaining, in and of itself.
This is quite clear from its approval of the fare hike and decreeing to the PTOs that the bulk of the profits from it must go to the bus operations. It is also for the same reason, apparently, that the government last year gave the PTOs a S$1.1 billion handout to help them purchase hundreds more buses as part of the Bus Service Enhancement Programme (BSEP) – and also to help fund their operations for the next 10 years.
What all these say is that whenever any part of the PTOs’ business is not profitable, the commuting public will be asked to prop it up, through fare hikes.
This is, perhaps, what riles the public most as it is seen to be an issue of greed more than anything else. The public becomes the easy target.
What the PTC should be looking at is why the bus operations themselves are bleeding red – and what really the problem is. Is it a simple case of higher fuel or manpower costs? Or is it bad or incompetent management?
To always turn to commuters to bail out, as it were, the PTOs is not the solution.
For then there will be no incentive for the PTOs to do better, and resolve the problem at the root.
In the meantime, the PTC should, if it doesn’t want to lose credibility, stand firmly on the side of commuters and – more importantly – be able to explain convincingly its reasons for any hikes.
Fare hikes and breakdowns are, in fact, not separate issues.
Why should commuters continue to pay higher fares for bad service?
