Train prices, psychology and power

By Aloysius Chia
Here’s a question: how do you turn an organization, redefine what it means, and, instead of having it serve the people, turn it into serving the interests of the state instead?
Answer: simple, you do what the government has done to the public transport system.
For what has happened to our public transport system essentially is this: instead of being a public good administered by a company largely owned by the government that has its roots as a government board, redefine it so that its purpose is to serve the well-being of the state.
How can this be done?
First, you treat the public transport companies just like any other corporation.
Second, you task an intermediate organization known as the ‘Public Transport Commission’ to decide prices as if it were separate and neutral.
Then, you distance the government from both this intermediate organization and the transport companies, giving the impression of difficulty in decision making.
What you get are a trio of entities that are seemingly separate, but are closer than ever before.
How can this be?
When the orthodox perception is that transport companies are now largely independent in the way they should operate, so as to extract the most efficient use of resources, you get an instance of a distancing away of public transport ownership from the people.
Now the government which was elected by the people takes it hands off as if it was disinterested, because it wants the operators to try to be profitable as far as possible.
Yet exactly the opposite is happening.
The government is involved in almost everything. Its need to be involved has become greater.
The transport masterplan, determined by the Land Transport Authority, shapes future prospects of the operators. The regulatory framework shapes actual operations. The Public Transport Commission shapes prices.
The operators have very little leeway, except in how it manages operations. Many of the plans may not actually be profitable, unless it is coupled with other policies such as a rise in population, and requests for price rises. The regulatory environment forces it to adhere to all sorts of rules even if it may not be beneficial to itself as a private operator.
The operators are faced with the twin dilemmas of being pressured to be as profitable as possible, while operating in a less profitable environment, demanded by regulators and consumers. Is it any wonder then that reliability has decreased?
What has been before a relatively public system that was meant to provide timely and reliable transport has now become a source of state revenue. Thus the government will do all sorts of things it can to expand, regulate and augment its position in the transportation landscape, even if it is unknowingly detrimental to itself.
Its changed perception of what transport operators are as companies has changed its behavior towards them, now supposedly independent.
Believing itself a stakeholder of privatized profits, funded essentially by taxes, it asserts itself to guarantee returns. Yet when it asserts itself, it makes changes to the transportation landscape which affects profitability.
At the same time it cannot refuse to regulate, for the duopoly would automatically exploit their market position to raise prices greatly if there was no regulation.
That forces train operators to find other ways, if it cannot readily raise prices, to maintain profitability. They can cut costs, or raise revenue from other sources. If they cut costs it will find ways to extract its infrastructure longer, since being an operator of mechanical systems of a specific kind, operators cannot replace labor so easily.
The government’s view of train operators as completely profit generating entities has crowded out the public interest by treating transport infrastructure as public responsibility, while treating returns as its own.
Its has created a divorce between the public and private operators by viewing those operators as a certain type of company – a largely cash generating one – not one instead where the public interest should take priority.
It thinks profitability can come with public benefit, affirming market principles where it can get the best of all worlds, but what it is denying is the fact that public benefit may not always be profitable, and what is profitable may be at the expense of public benefit.
Its refusal to acknowledge this fact will be its very own downfall.