Published February 20, 2009

4.6% fare cut will cost operators $80m

By SAMUEL EE

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(SINGAPORE) A 4.6 per cent cut in bus and train fares will cost the two public transport operators, SBS Transit and SMRT Corp, about $80 million over 15 months.

Neither company would comment on how much each will be impacted except to say that respective statements will be issued today but it is understood it will cost SBST, the dominant bus operator, slightly over half of the $80 million figure, with SMRT - the biggest rail operator here - accounting for the remainder.

The Public Transport Council (PTC) yesterday announced that from April 1, commuters will see an overall 4.6 per cent reduction in fares - which means 2-14 cents less for a direct journey or a journey with one transfer by an adult.

Those paying EZ-link fares and concession fares will enjoy the savings, while there is no change to all cash fares for buses and all single-trip ticket fares for trains.

The fare rebate will be in effect over a 15-month period from April 1, 2009 to June 30, 2010.

The PTC said the reduction more than offsets the fare increases of the past three years combined - 0.7 per cent in 2008, 1.1 per cent in 2007, and 1.7 per cent in 2006.

It added that this cut also does not include the increase of up to 5 per cent under the fare adjustment formula that the public transport operators have foregone by not applying for a fare adjustment in 2009.

The council said the 4.6 per cent fare reduction package comprises both a fare cut and an increase in transfer rebate, with the total package costing public transport operators about $80 million over 15 months.

This amount comprises a fare cut of $52 million, of which $37 million is the savings from the Budget measures that the operators are passing on to commuters.

Another $28 million is the amount over the 15-month period to fund the transfer rebate increase. A transfer rebate offsets the penalty incurred when a commuter makes a journey transfer, for example, when he or she changes buses.

The PTC said the fare revision exercise for 2009 has been brought forward to April instead of October so that commuters can benefit earlier from the decrease in fares.

With effect from 2010, the fare revision exercise will take effect from July 1 'in light of rapidly changing economic conditions'.

The PTC said that when it was working with the public transport operators to reduce fares, it took into consideration the need to continue moving closer towards distance-based through-fares and spread the benefits across as many commuters as possible.

But in view of the poor economic conditions, the council decided not to fully implement through-fares this year to reduce the burden of adjustment for both commuters and operators. The full implementation of through-fares will now take place in 2010.