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PTC grants SBS Transit, SMRT fare hike of 2.8%

1.1m commuters to be shielded from April hikes; new off-peak monthly pass from July

PUBLIC transport fares will rise by the maximum possible 2.8 per cent from April even as oil prices fall, due to a rolled-over component and the way cost changes feed into the fare revision formula with a one-year lag.

PUBLIC transport fares will rise by the maximum possible 2.8 per cent from April even as oil prices fall, due to a rolled-over component and the way cost changes feed into the fare revision formula with a one-year lag. INFOGRAPHIC: How the Public Transport Council decides on fare changes

The hike will raise fare revenues of public bus and train operators SBS Transit and SMRT by an estimated S$48.5 million a year. But the Public Transport Council (PTC) has decided that they must give a larger chunk - S$13.5 million - this year to the Public Transport Fund, which funds transport vouchers for the needy.

PTC chairman Richard Magnus said that the 15-member council "made a concerted effort to minimise the impact on commuters, even to the extent of insulating some from the increase altogether". The overall 2.8 per cent fare hike, lower than last year's 3.2 per cent increase, will thus be implemented such that a total of 1.1 million commuters - senior citizens, young children, low-wage workers and those on concession passes - will see no change in fares.

While the fare revision formula - based on changes in core inflation, wages, energy costs and productivity - worked out to an adjustment of -0.6 per cent for 2014, a 3.4 per cent increase postponed from 2013's fare review exercise had to be added to this, resulting in a net 2.8 per cent rise for PTC to consider.

In deciding to grant the full adjustment, PTC wanted to strike a balance between affordable fares for commuters and ensuring that the system remains sustainable on the operators' end, Mr Magnus said at a media briefing on Wednesday.

What this works out to is a 2-5 cents increase in adult card fares for bus and train trips and a one-cent rise in student concessionary card fares, from April 5. Cash fares for adult bus and train rides will rise a steeper 10 cents, to incentivise commuters to use contactless smart cards.

Prices for all monthly concession passes for adults, national servicemen, senior citizens and students will remain unchanged. The government also decided to keep its concessionary fares for lower-wage workers and persons with disabilities too.

As both SBS Transit and SMRT were granted the full 2.8 per cent fare adjustment they applied for, PTC decided that they should contribute more to the Public Transport Fund.

SBS Transit shares closed 11 cents higher at S$1.81 each, while SMRT shares closed 2 cents higher at S$1.635 on Wednesday, before the fare review decision was announced.

SBS Transit will have to give back 25 per cent of the estimated revenue increase, or S$5.5 million, up from last year's 20 per cent. SMRT, being the more profitable, will have to give 30 per cent, or S$8 million, up from last year's 25 per cent.

This takes the two operators' total contribution to S$13.5 million, 28 per cent of the total extra fare revenue and more than last year's S$11.58 million. That sum was paid to the fund on a quarterly basis last year, but PTC is still in talks with the operators on this year's arrangement.

The government will draw down S$7.5 million from the fund to fund 250,000 public transport vouchers worth S$30 each, which households in need can apply for from March 16. Transport Minister Lui Tuck Yew said on his Facebook page that the government will simplify the application process further and has other plans for "meaningful use" of the Public Transport Fund to be shared at a later date.

Separately, the government said that it would start a two-year trial of off-peak travel passes on July 5 to encourage more commuters to travel during non-peak hours.

The S$80 off-peak monthly travel pass will offer unlimited travel on public buses and trains before 6.30am, between 9am and 5pm and after 7.30pm on weekdays. All weekends and public holidays are considered off-peak too.

Based on current travel patterns, the Transport Ministry estimates that 40,000 commuters could benefit from the new passes. If take-up is as strong as expected, the trial would cost the government S$10 million a year. But take-up for the existing adult monthly passes, introduced last year, has been weaker than foreseen. So far, 16,000 commuters have purchased monthly passes though another 25,000 are estimated to be able to benefit from it.