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Source:
www.ptc.gov.sg |
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Adjustment to Bus and Train Fares
under the New Fare Review Framework |
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The public transport operators (PTOs), namely SMRT
Corp (SMRT) and SBS Transit (SBST), applied to the Public Transport Council (PTC)
in early May for an increase in bus and train fares. |
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After extensive studies and deliberations of the
PTOs' fare applications over the last four weeks, the PTC has approved an
overall fare increase of 2.4% for 2005. |
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This is in line with the new fare review framework
recommended by the GPC1- led Fare Review Mechanism Committee (FRMC) in
February 05 and accepted by the Government in March 05. |
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PTC has approved a tiered increase in fares
according to the distance travelled. With effect from 1 July 2005, adult EZ-Link
fares will increase by 1 to 2 cents for buses and 1 to 3 cents for trains
while adult cash fares will increase by 10 cents across-the-board. |
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This tiered increase will help to minimise the
impact on commuters who make short trips or transfers, as adult EZ-Link fares
for the first fare band of bus and train fares will be increased by only 1
cent. |
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Child/student fares and prices of student/NSmen
concession passes will not be increased, as PTC is mindful of the impact of
any fare increase on these dependent groups. |
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Factors Considered |
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Under the new fare review framework, fares may be
increased by 2.4% (on average) this year based on the new formula as follows: |
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Maximum Fare Adjustment = 0.5CPI + 0.5WI - 0.3%, |
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where CPI refers to the change in Consumer Price
Index over the preceding year, and WI refers to the change in Average Monthly
Earnings (Annual National Average) over the preceding year, adjusted to
account for any change in the employer's CPF contribution rate. The 0.3% is
the productivity extraction to be used for the next 3 years. For this year,
CPI and WI is 1.7% and 3.6% respectively. |
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The PTC has considered the various factors
recommended by the FRMC and concluded that there are no extenuating
circumstances that require PTC to either vary the fare adjustment quantum
determined by the new formula or to reject it. Specifically, the Council is
satisfied that the current economic condition is not considered to be adverse
and that there is no significant deterioration in the overall affordability of
public fares as illustrated below. |
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The latest GDP growth
forecast of 2.5% - 4.5% for 2005 is consistent with the long term GDP
growth for 3% - 5% envisaged for Singapore; |
| The unemployment rate for March 2005 has
improved to 3.9% as compared to 4% in 2004 and 4.7% in 2003; and |
| There are no signs that the
affordability of public transport has deteriorated in recent years, even
with a small fare increase for 2005. The affordability indicator2
recommended by the FRMC shows that the percentage of monthly household
income spent by the characteristic family on public transport has
decreased slightly from 5.4% in 2003 to 5.2% in 2004. As an indicative
check on a 2.4% fare increase, the affordability indicator could even
decrease slightly, given the likely prospect of improving general wage
level for 2005, and since child/student fares and concession passes
remained unchanged. |
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As recommended by the FRMC, the PTC has also made
a reality check on PTOs' ROTA (Return on Total Assets) to further ensure
commuters' interests are protected. For the financial year ended in December
2004 or March 2005, the ROTAs (with respect to only the bus and train
operations) are 4.6% for SBST and 6.5% for SMRT, based on the proforma
accounts3 submitted by PTOs. |
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The PTC is satisfied that while PTOs' profit
levels can be considered to be healthy, they are not excessive when compared
with companies with similar industry structure and risk profiles. |
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More..... |
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Source:
Public Transport Council Press Release 30
May 2005 |
PTC approves tiered increase in bus and train fares 
