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Khaw Boon Wan: Bus contracting model may result in bus fares hikes

Bus contracting model which will take effect on 1 September 2016 may result in the raising of bus fares, said the Minister of Transport, Khaw Boon Wan.

He made the remarks in response to queries by Chinese daily Lianhe Zaobao in an e-mail interview, saying that the bus contracting model will raise service standards. Hence the improvements would raise the fees. However, he ensured that the fees would still be affordable.

Under the Government contracting model, Land Transport Authority (LTA) will determine the bus services to be provided and bus operators will bid for the right to operate these services. They will be paid fees to operate the services, while fare revenue will be retained by the Government.

The Government would also own all bus infrastructure such as depots, as well as operating assets such as buses and the fleet management system.

To ensure a smooth transition for all stakeholders, bus contracting would be implemented in phases over several years.

Bus services would be bundled into twelve bus packages with about 300-500 buses each. LTA would tender out three packages for a start. The contracts would be for five years, and could be extended by another two years on good performance. In total, the three packages will comprise about 20% of existing buses.

The other nine bus packages, comprising the remaining 80% of existing buses, will continue to be operated by the existing operators as negotiated contracts, for durations of about five years. After these negotiated contracts expire, more bus services would be gradually tendered out.

Mr Khaw said the role of the new bus contracting model when the distance covered by MRT lines expands to 360km by 2030 is difficult to predict. However, he believes that buses will still play an important role in public transport here, just like those in cities with well-developed subway networks, such as New York, London and Tokyo.