The Business Times

Public transport fares to rise 3.2% this year

$11.6m of the additional revenue will go to the Public Transport Fund

Published Thu, Jan 16, 2014 · 10:00 PM
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[SINGAPORE] Public transport fares will rise 3.2 per cent this year and 3.1 per cent next year, with this year's increase raising $53.5 million for public transport operators although $11.6 million of it will go to the Public Transport Fund.

In announcing its decision yesterday, the Public Transport Council (PTC) said that it took into consideration the 2012 fare cap, applied the old fare adjustment formula and came up with 4.5 per cent. The 2012 fare exercise was suspended to give the Fare Review Mechanism Committee (FRMC) time to complete its work, but the government decided to apply the 2012 quantum in the 2013 Fare Review Exercise.

For 2013, the new formula resulted in a fare cap of 2.1 per cent for a total hike of 6.6 per cent.

"Clearly, 6.6 per cent in one go is very high, and so, to minimise the impact on commuters, it was quite obvious to us that we should just do part of the increase this year, and rollover the rest as provided for under the new "rollover" mechanism as recommended in the FRMC report, and came to the decision to do 3.2 per cent for this round, and rolling over the balance of 3.4 per cent to the 2014 exercise," said PTC chairman Gerard Ee.

But he added that because the 2014 fare adjustment formula will probably be minus 0.3 per cent, the remaining fare cap next year should be about 3.1 per cent.

Mr Ee stressed that the PTC's mandate is to strike a balance between fare affordability and the financial viability of the public transport operators (PTOs).

With this year's fare increase of 3.2 per cent "significantly lower" than the expected average national wage increase for 2013 - expected to be close to 5 per cent - he said that the fare hike is acceptable from the affordability perspective.

From April 6, 2014, adult card fares for buses and trains will go up by four to six cents per journey, while student concessionary fares will rise by two cents per journey and senior citizen concession fares by two to three cents.

But cash fares will cost more, with adult bus and train rides climbing 20 cents per trip, and concession cash fares up 10 cents per trip.

To ensure fares remain affordable, existing concession schemes are enhanced. There will be free travel for children under seven years old (from below 0.9 metre tall); monthly concession passes for polytechnic students will be cut to the same as those for secondary school and junior college students; lower prices for all hybrid monthly concession passes; a new $120 adult monthly unlimited travel pass to help frequent public transport users cap their expenditure; a new $60 monthly unlimited travel concession pass for senior citizens; and the removal of the daily limit for all train and hybrid monthly passes.

Mr Ee added: "All these enhancements are expected to benefit approximately half a million of the current 1.2 million existing concession beneficiaries, and these are on top of the two new concession schemes for low-income workers and persons with disabilities that would be separately implemented by the government."

Of the $53.5 million in additional fare revenue, $36 million is for SBS Transit and $17.5 million for SMRT. As the bus business is less profitable than rail, the FRMC had recommended that the weightage for fare revenue allocation be set at 1.1 in favour of the bus mode. As a result, the bus mode will receive about $48 million while the rail mode gets $5.5 million.

SBST operates three-quarters of all public buses in Singapore, while SMRT runs a bigger rail network.

The more profitable SMRT will contribute 25 per cent of the fare revenue increase to the Public Transport Fund, which helps needy families cope with fare adjustments. SBST's share is 20 per cent, taking the two PTOs' total one-off contribution to $11.58 million or 21.6 per cent of the extra revenue. SBST said that it would contribute $7.2 million to the fund.

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