Singapore Mass Rapid Transit’s (SMRT) journey towards achieving the right balance between rail reliability and cost-effectiveness is akin to walking a tightrope.
In a recent interview with The Straits Times, SMRT Chairman Seah Moon Ming, who has helmed the company since 2017, divulged that the public transport operator was nearing this delicate equilibrium. He asserted, “We want high performance, but at the same time, we must also look at the costs.”
The lack of proper maintenance under the dubious leadership of SMRT’s former CEO, Saw Phaik Hwa, who prioritized profits over the commitment of sufficient resources, resulted in the most severe service disruptions in the company’s history on the North-South Line in December 2011. The subsequent fallout shed light on the urgent necessity for suitable maintenance protocols.
Seah aptly summarizes the conundrum, stating, “We never want to undermaintain because in the past, it was an issue. But neither do we want to do overmaintenance,” acknowledging the dual need for service reliability and fiscal prudence.
SMRT’s reliability has seen significant improvements since Seah’s tenure began, even though recent months have seen an uptick in MRT line delays. Yet, Seah cautiously reminds us of the risk of overspending public funds, coming predominantly from government grants, in the relentless pursuit of better reliability scores.
When comparing rail reliability, it’s easy to look at seemingly staggering statistics and make hasty judgments. For instance, Taipei Metro’s impressive 16 million train-km between delays in 2022 may make SMRT’s 1.65 million km seem paltry.
However, comparison for the sake of comparison often leads to skewed interpretations, akin to the tendency of benchmarking ourselves against some of the world’s oldest metros, like London’s 160-year-old system.
An often overlooked component in public transport discussions is fare pricing.
In the face of dwindling profitability, SMRT’s Mr. Ngien highlighted that Singapore’s public transport fares are among the world’s lowest. With a range of 99 cents to S$2.26, Singapore’s fares are a fraction of those in cities like London or Hong Kong, which can run up to S$9.20 and S$4.90 respectively.
This fare comparison, though, might be a simplification as many regular commuters in cities like London opt for cheaper monthly or yearly passes.
Meanwhile, in cities like Taipei and Hong Kong, metro prices have remained relatively stable, with Hong Kong’s MTR Corporation increasing ticket prices for the first time since 2019 and Taiwan’s Metro keeping its price steady for 26 years.
Despite the low fares, SMRT posted a profit after taxes of S$73.6 million for the year ending 31 March 2022, a decline from S$96.7 million the previous year.
The historical trend of 19 fare increases since 1990 in Singapore raises the question: has the quest for profitability taken precedence over fare stability? And does the increase in fare actually go towards the maintenance and upkeep of the rail system, or is it used to pay its higher management?
Former SMRT CEO Desmond Quek was paid S$1,871,714 with a basic salary of S$830,955, while his variable performance pay was S$1,040,759 in 2016. We don’t know the current CEO’s salary, as SMRT was privatised by Temasek in 2016.
In comparison, TfL’s former boss Michael Brown, who was running the most expensive metro fare in the world, received £508,301 (S$871,600) in total remuneration, including taking home the biggest bonus of £133,586 (S$230,000) in 2020.
In response to it charging the most expensive fares of any metro in the world, London’s Tube says it receives less taxpayer subsidy than other city networks. While in Singapore, it was announced last year that the Government would provide an additional subsidy of about S$200 million in 2023, on top of the current subsidies of more than S$2 billion annually to run bus and train services.
The inherent tension between profitability and maintenance costs, especially for a privatized company like SMRT, presents a unique conundrum.
On the one hand, maintenance cannot be compromised, given its importance for service reliability.
On the other hand, regular fare increases can burden consumers, particularly those from low-income households.
At the heart of the matter, SMRT’s saga is a reminder that while financial sustainability is crucial, a balance needs to be struck between maintaining affordable fares and ensuring reliable services.