Featured News SMRT and SBS Transit to earn S$59 million more in train revenue...

SMRT and SBS Transit to earn S$59 million more in train revenue alone with 7% fare hike

The fare hike will also see bus fare revenues increase by about S$73.5 million. This amount will be used by the Government to offset bus operation subsidies

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Public transport operators SMRT and SBS Transit are set to make a combined S$59 million more in train revenue alone, with the seven per cent train and bus fare increase that was announced by the Public Transport Council (PTC) today (8 Oct).

Seven per cent is the maximum allowable increase under this year’s fare review exercise and the PTC had decided to enforce the maximum fare hike from 28 December 2019 onwards. Both SMRT and SBS Transit had applied for the 7 per cent fare increase.

PTC chairman Richard Magnus told reporters that the decision to hike public transport fares was made since the costs of running public transport have increased.

Noting that the worldwide increase in energy prices and manpower wages have increased the costs of operating public transport, Mr Magnus said that both SMRT and SBS Transit had incurred losses on their rail operations.

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SMRT Trains reported a net loss of S$155 million in the last financial year while SBS Transit incurred losses of S$125 million for the Downtown Line it operates. SBS Transit’s train division reported losses of “tens of millions of dollars” in the last financial year.

Both operators cited rising costs due to maintenance expenses and the introduction of new rail lines in applying for the maximum fare increase. Mr Magnus revealed that the fare hike would allow fare revenue to rise by about S$132.5 million, with SMRT Trains earning about S$40.2 million more in train revenue and SBS Transit Rail earning about S$18.8 million more.

The fare hike will see bus fare revenues increase by about S$73.5 million. This amount will be used by the Government to offset bus operation subsidies.

From their expected fare revenue increase, the PTC expects SMRT and SBS Transit to set aside 10 and five per cent respectively towards the Public Transport Fund, which will provide public transport vouchers to lower-income families to cope with the fare hike.

Both SMRT Trains and SBS Transit are required to contribute a total of S$3.89 million to the fund. SBS Transit will give S$1.88 million while SMRT will contribute S$2.01 million.

In July this year, Transport Minister Khaw Boon Wan drew criticism when he said that higher fares are necessary to combat rising subsidies, in Parliament. Revealing that the Government is currently subsidising more than 30 per cent of public transport operations, Mr Khaw said:

“Between 2016 and 2017, the total cost of running the rail network has increased by around $270 million. As the fares paid by commuters do not cover operating costs, the rail companies are operating at a loss.
“In the latest reported financial year, SMRT Trains incurred a loss of $86 million. SBS Transit’s train division also lost tens of millions of dollars.”

The increased expenditure in the public transport sector has been due to the Government’s efforts to raise rail reliability, in the wake of the many train breakdowns, service disruptions, MRT tunnel flooding and Joo Koon train collision in recent years. There is speculation that these issues erupted in recent years due to poor maintenance practices in the past.

Asserting that the MRT network has improved seven-fold from 2015, Mr Khaw said that the PTC fare adjustments were not implemented to the full extent of what the formula allowed until recently and said that “we must have the discipline to implement the formula fully”. He asserted:

“If we had strictly followed PTC’s fare formula, the operators would have been better able to cover the costs of the intensified maintenance. But we must have the discipline to implement the formula fully, as we adjust fares over the next four years.
“In due course, the PTC will need to review the fare adjustment mechanism to reflect the increased operating cost to support the intensified maintenance, and the additional operating subsidies from the Government to the MRT system.”

Netizens were left fuming at Mr Khaw’s remarks and felt that the people should not need to compensate for high transport operating costs that rose to improve the reliability of public transport in the wake of the recent debacles.

Some agreed that this was an example of “privatising profits and socialising losses,” while many others called on Mr Khaw and the top management of SMRT and SBS Transit to reduce their large pay packages to compensate for the high expenses themselves.

Netizens fume as Khaw Boon Wan claims higher public transport fares are necessary to combat rising subsidies

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