Public transport fares could be cut by as much as 5.7%

SINGAPORE — Public transport fares could be slashed by as much as 5.7 per cent next year, the Public Transport Council (PTC) signalled on Tuesday (Sept 13) as it commenced its fare review exercise.

The reduction could be the highest in recent times — lower than the 4.6 per cent decrease in the midst of the 2009 global financial crisis. It also comes on the back of a 1.9 per cent cut in fares this year.

The fare formula — which is valid until the end of next year — used by the PTC is pegged to changes in the Core Consumer Price Index, the Wage Index and the Energy Index over the preceding year. “Based on this, the maximum allowable fare adjustment quantum is -5.7 per cent,” PTC said.

With the public bus industry transiting to the bus contracting model, bus operators will not be required to apply to the PTC for approval of fares. Train operators may submit fare adjustment applications by Oct 7.

The PTC will announce its decision on the fare adjustment quantum in the last quarter of this year. Typically, the new fares kick in from April. Experts interviewed noted the falling energy prices and the deflationary environment. Last month, consumer prices fell for the 21st consecutive month — the longest streak of negative inflation on record.

National University of Singapore transport researcher Lee Der-Horng cited the downward trend in energy prices as a major factor. He added that the significant reduction for fares next year could be due to a time lag effect. “The (fares) could have been adjusted downward (further this year) but was constrained by the data available,” he said.

SIM University senior lecturer Walter Theseira noted that energy prices had fallen greatly over the past year. On top of that, Singapore is currently in “a mildly deflationary environment”, he said.

Nevertheless, he felt that the question is whether fares can cover the long-term costs of delivering a world class public transport, including funding the quality of service which the public expects and the costs of replacing assets. He said: “The fare formula is well-tuned to cover operating costs but it may not do as good a job of covering longer run system-wide costs.”

He added: “Public subsidies may be necessary to deliver the quality of service Singaporeans expect at the price they’re willing to pay, but as time goes on, we have to ensure the system remains cost effective.”

The PTC said that in considering the applications, it will ensure that fares “strike a balance between ensuring that the public transport system is financially-sustainable and keeping fares affordable for commuters”.

SBS Transit said it would make an announcement if it submits an application for a fare review. SMRT declined comment.

In 2009, with Singaporeans reeling from the global financial crisis, fares were cut by 4.6 per cent after the two public transport operators chose to pass on cost savings from Government’s measures to commuters in the form of lower fares.