If there is any transport fare increase this year, take heart that the increase amount will be capped at 1.8%, lower than the 2% increase for GST. The cap is calculated for using a formula that accounts for inflation, wage increase and productivity of operators.
In addition, you may wish to thank PTC for deferring the fare adjustment exercise by three months. Traditionally, any fare increases is effected in July. However, PTC deferred the process by three months last year as it was an exceptional year, and has since decided to reward the passengers with three months freeze on current fare.
It will be even better if they do not approve the fare application by the two operators.
Last year, the fare hike for buses was unavoidable due to the high diesel prices. This year, however, the diesel price has come down, so there is no reason for using this as a supporting reason to justify the fare hike. However, the manpower has increased substantially, especially in light of the new 5-day work week arrangement that the union has reached with both operators.
We shall wait and see what are the reasons the two operators used to justify their fare hike. These are my guess:
SBS Transit:
- Increased cost due to fleet renewal. Buying 1,000 new single deck buses to replace the old fleet which has reached the end of their statutory lifespan.
- Increased cost due to better customer services. Introduced iris which allows customers to find out when the next bus is arriving at bus stops, and allow them to plan for bus journeys using Journey Planner.
- New bus services that provides more direct links and faster bus services.
SMRT:
- GST increase from 5% to 7%. Traditionally transport operators bear the GST increase, but this has increasingly been eating into the profit. Even if we are asking for the maximum of 1.8%, we still cannot cover the 2% increase in GST.
1.8% cap on any bus, train fare hike this year
Christopher Tan, Senior CorrespondentANY decision this year on raising bus and train fares will be known only in August at the earliest, instead of the usual May announcement in previous years.
And if the Public Transport Council (PTC) approves an increase, fares will go up by 1.8 per cent at the most, a spokesman for the council told The Straits Times.
Traditionally, SBS Transit and SMRT submit their applications by May 1, and revisions take effect in July.
But last year, because the PTC was busy adapting to new regulatory powers, the fare adjustment exercise was delayed by three months.
It has decided to stick with the new deadline.
Both operators declined to say if they will ask for a fare increase, but it remains to be seen whether the planned two-percentage-point rise in goods and services tax (GST) in July will influence the decision.
A two-point rise in GST to 7 per cent translates to about $22 million in additional cost to the two operators.
Although GST was never passed on directly to public transport commuters, it is computed indirectly in the fare adjustment formula, which takes inflation - represented by the Consumer Price Index - into consideration.
In the past two years, the operators cited higher oil prices as the main justification for a fare rise.
Source: The Straits Times, 23 March 2007
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