Oh no, fares formula change again to benefit who?

mrt-2_j-_ruiz_station

Why do we keep changing the transport fares formula to the detriment of commuters?

I refer to the article “Public transport fare formula to take into account network expansion and usage” (Straits Times, Mar 22).

It states that “The Public Transport Council (PTC), which announced this on Thursday (March 22), said that the network capacity factor (NCF) will give equal weighting to additional capacity put into both the bus and train networks.”

As to “The NCF compares the usage of the network against the capacity added. For example, if the network capacity were to increase more than ridership, this would result in an increase in the NCF component, thereby increasing the fare cap” – the timing of this change in the fare formula may be rather coincidental – as “The North-South and East-West MRT lines – Singapore’s oldest and most heavily used rail systems – posted a rare dip in ridership last year.

… average daily ridership on the two lines was 1.823 million last year, 3.1 percent lower than in 2016. This shrinkage reversed an almost continuous upward trend seen since the two lines opened 30 years ago.”

Isn’t this kind of like changing the formula when it may be more likely to result in an increase in fares? Why was this never looked into – in the last 29 years or so when ridership was increasing every year – which may have resulted in a decrease in fares?

With regard to “Annual operating costs increased by more than $900 million between 2012 and 2016 while fare revenue increased by only $230 million during that time, it said” – why are we only talking about the increase in operating costs and fare revenues for a selected period, without mentioning profits?

In this connection, “Bus and train operator SBS Transit posted a 50.3 per cent rise in net earnings to $47.1 million for the year ended Dec 31, 2017, and SMRT‘s “operating profit increased 14.6% to $138.5 million” in FY2016.

With regard to “While government subsidies have helped make up the shortfall, a widening gap between costs and fares is not sustainable, said the PTC” – what about the huge transport revenues of the Government over the years?

In this connection, the estimated operating revenue of the Ministry of Transport is a whopping $9.1 billion for FY2016, which is the highest amongst all the ministries with the exception of the Ministry of Finance which collects income and other taxes.

In respect of “Of course we will need to bear in mind the affordability for commuters,” he said.

He added that a 3.2 per cent fare reduction, rolled over from last year’s fare review, could help offset any increase resulting from the new component” – does it mean that the -3.2 reduction would have resulted in a reduction in fares for practically everybody this year already?

If this is the case – why are we deferring it to next year’s fare review exercise – and to in a sense add insult to injury – change the fare formula again now such that the deferred decrease may be reduced by the new formula?

Is it fair to do this to commuters?

Is this not akin to changing the formula when it results in a fare decrease, and sticking to the formula when it resulted in fare increases in the past?

Do the above not make you wonder as to whether our public transport authorities are more focused on protecting the consumer or the operators?

By the way, has anyone raised this in Parliament or in the media?

Leong Sze Hian

About the Author

Leong
Leong Sze Hian has served as president of 4 professional bodies, honorary consul of 2 countries, an alumnus of Harvard University, authored 4 books, quoted over 1500 times in the media , has been a radio talkshow host, a newspaper daily columnist, Wharton Fellow, SEACeM Fellow, columnist for theonlinecitizen and Malaysiakini, executive producer of Ilo Ilo (40 international awards), invited to speak more than 200 times in over 30 countries, CIFA advisory board member, founding advisor to the Financial Planning Associations of Indonesia and Brunei. He has 3 Masters, 2 Bachelors degrees and 13 professional  qualifications.