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Bus routes starting from Ang Mo Kio, Yio Chu Kang, Yishun up for tender

SINGAPORE — With routes plying densely populated areas that could push up operating costs, and low bid prices appearing to be a key factor in winning the contest, the third package of bus routes launched for tender by the Government on Tuesday (June 7) may be the most challenging yet for potential operators.

Details of Seletar bus package. Source: LTA

Details of Seletar bus package. Source: LTA

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SINGAPORE — With routes plying densely populated areas that could push up operating costs, and low bid prices appearing to be a key factor in winning the contest, the third package of bus routes launched for tender by the Government on Tuesday (June 7) may be the most challenging yet for potential operators.

Set to be rolled out in two tranches from the first half of 2018, the Seletar package comprises 26 bus services — including two new ones — that will ply routes from Ang Mo Kio, Yio Chu Kang and Yishun bus interchanges, the Land Transport Authority (LTA) said.

The package includes about 420 buses, with this number set to rise to about 500 in 2023, it added.

Experts said the complexity of managing services in a densely populated area would likely drive up operating costs.

Of the 11 operators TODAY contacted, Tower Transit Singapore and Woodlands Transport Service have thrown their hats into the ring, while four operators, including incumbents SBS Transit and SMRT Buses, will make their decision after going through the tender requirements.

Mr Andrew Bujtor, managing director of Tower Transit Singapore, which bagged the first contract in May last year and began operations on May 29 this year, said: “We most certainly have our sights set on the Seletar package. There are significant economies and efficiencies that we can unlock by operating on a larger scale.”

Mr Roger Wong, Woodlands Transport Service general manager and head of department (bus), said the firm was more confident of a successful bid this time round, having participated in the first two tenders.

SBS Transit’s senior vice-president for corporate communications Tammy Tan said the operator would assess the tender “as we do all competitive bids”, while SMRT Buses managing director Tan Kian Heong said the firm was “studying the tender requirements carefully”.

Go-Ahead Singapore, meanwhile, would “read this new tender with interest”, said its managing director Nigel Wood.

Aedge Holdings chief executive Poh Soon Keng said the firm would decide whether to place a bid after it attends the briefing on the tender.

Under the new government contracting model, the Republic’s bus services would consist of 12 packages, three of which would be put up for tender. The operators earn a fee for running bus services, while the Government retains fare revenues.

Incumbent operators SBS Transit and SMRT Buses will operate the remaining nine under negotiated contracts for about five years, after their Bus Service Operating Licences expire in August this year. More bus services will be gradually tendered out thereafter.

The first two packages went to foreign operators. Tower Transit, which is based in the United Kingdom, clinched the first contract to ply 26 routes from the Bukit Batok, Clementi and Jurong East interchanges. UK operator Go-Ahead Singapore netted the second one last November to operate 25 services in the Punggol and Pasir Ris areas.

The successful bidder for the latest package will operate the bus services for five years, with the possibility of a two-year extension for good performance. It will also operate, manage and maintain the Ang Mo Kio and Yio Chu Kang interchanges and Seletar Bus Depot.

The LTA said: “All tender submissions will be evaluated through a two-envelope process for quality and price, with more weightage given to the quality proposals submitted by the tenderers.”

Transport analyst Walter Theseira, a senior lecturer at SIM University, pointed out that routes that serve a more densely populated area would require a higher level of service from the operator.

While this does give more opportunities for profit, such as in the form of higher service fees to run operations on a dense route, the operator could find it more challenging logistically to meet performance targets.

Dr Park Byung Joon, also a senior lecturer at SIM University, noted that Go-Ahead Singapore’s “very aggressive” pricing strategy during its bid for the second bus package had sent a signal to bidders on the price they should set “if they want to win”.

Go-Ahead Singapore had won the second tender with the lowest asking price of S$497.7 million.

National University of Singapore transport researcher Lee Der-Horng said: “After the first two rounds, it has been obvious that most of the bidders have been able to meet the technical qualification, and (price) seems to be the determining factor.”

Asked whether a third loss would say anything about the two incumbent operators, Dr Park said it would not make a significant difference to them, since they would be operating the remaining nine packages.

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