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Bus Fare Hike |
I refer to the letter " fare hike affects only 6% of passenger trips" (ST Jun 18) by the Chairman of the Public Transport Council, Mr Eric Gwee Teck Hai and that by Mrs Cheng Lay Tin, Vice-President of Corporate Communications, Singapore Bus Services Ltd "No fare increase for 94% of the passengers". I agree fully with Mr Gwee when he said that the bus companies need to remain viable by reaping a reasonable financial return in order to continue to make long-term investments to upgrade and replace buses and equipment, and to serve commuters better. But what constitutes a reasonable return? Let's examine SBS's financial results for the last three years. The figures for financial years 2000, 1999 and 1998 are as follows: Profit attributable to shareholders - $53.7 million, $46.2 million, $39.0 million; Profit before tax: $73.0 million, $62.4 million, $50.8 million; Profit before Capital charge: $119.3 million, $124.5 million and $122.0 million. The latest financial results for SBS show that its operating profit increased 17.1% over 1999 and its margin - operating profit as a percentage of turnover - increased from 9.06% to 9.97%. Its return on shareholders funds (ROE) similarly increased from 20.50% to 21.36%. These are extremely juicy figures indeed and the envy of at least 98% of all the listed companies on the Singapore Exchange, not to mention the thousands of non-listed business entities, a good many of which are in fact reporting losses or reduction in profit. Many, especially the dot.coms and other start-ups have been liquidated and thousands have lost their jobs. Even our protected banks are earning ROEs of around 12%. To top it all, SBS has paid/committed to pay its shareholders a hefty total of 43% in dividends for the year 2000. Not exactly consistent with the need to provide reserves for future investment to replace/upgrade the buses and other capital-intensive equipment and possible hike in energy costs, is it? While still on the SBS's financial results, its Cash Flow Statement showed a negative amount of $35.766 million for F/Y 2000 compared to a negative amount of $118.808 million the year before under the item listed as 'short term investments'. This means that SBS had lost a total of $154.574 million in two years. (I believe the loss of $118.808 million was due to the ill-conceived bid for a piece of 99-year leasehold land to build condominiums in an earlier year URA tender.) Quite obviously the scope for SBS to improve its bottom line financial results is tremendous if it can stop the haemorrhaging of its cash reserves and investments through better and more astute treasury management. This is should put what Mrs Cheng of SBS assertion's that the scope for SBS to manage its cost is limited, into proper prospective. The PTC and SBS should realize that SBS has been able to accumulate the very large cash reserves from operations surpluses from earlier years because of its monopoly of bus operations and that such reserves and its astute management for better returns should be a very significant factor in considering SBS's application for future fare increases. In other words, the commuting public in Singapore has paid for SBS's cash reserves since its formation. While the PTC is concerned about the bus operators need to remain viable, this point of which I have conclusively debunked, it would appear that the PTC had not fully consider the need for the public interest to be safeguarded. The duty of the PTC to safeguard both the bus operators and commuters' interest is mentioned in the SBS financial reports. As for Minister-without-Portfolio and Secretary General of the NTUC, Mr Lim Boon Heng's reported remarks in the newspaper that the bus captains also deserve a pay hike and Mrs Cheng's similar tug at our heartstring about the ungodly hours such employees have to tolerate, lets put things into proper perspective. My telephone enquiry to SBS Corporate Communications department shows that SBS currently has a bus captain crew strength of about 5500, constituting about 75% of SBS's total staff strength. Unfortunately I am not able to ascertain what their total salary for F/Y 2000 was. However I have asked a middle-aged SBS bus captain at SBS Jurong East Interchange who said that the salary ranges from $1500 to $3000 a month. (SBS has not provided me with the figures I have requested.) If we take an average of $2200 a month, it would cost SBS around $121 million a year. This is only about 47% of SBS's total wage bill of $259 million in F/Y 2000, whereas the bus captains constitute 75% of SBS staff strength. There is hardly any justification for a fare hike just to pay for and retain the bus captains, which was what SBS's Mrs Cheng had used as a justification. I am also very disappointed with the PTC's apparent outright rejection of the idea of the private bus operators participation in the provision of bus transportation in competition with those provided by SBS and TIBS, although I am not entirely surprised. Two of its members are from the two said bus companies with another two from the NTUC Comfort group and the SMRT. This, the PTC's decision, seems to be against the policy of the Ministry of Communications and Information Technology whose website had listed its policy on land transportation as follows: the public's demands in terms of coverage are met; fares remain affordable; service is efficient and of high quality; the public has a wide range of transport choices. It is also against the PTC's own stipulation of the absolute operation service standards as listed in the SBS financial report as follows: a). commuters to consider if or how service levels should be improved. b). the PTC to consider requests for new bus services and evaluate requests for improvement to service levels. I think the PTC has failed to show conclusively that it had undertaken both the above. I feel that the PTC'a argument of a loss of seamless in the integrated travel, if the private bus operators were to run the feeder service, to be lacking in a strong basis. This is because the private buses could also be fitted with the farecard system. By rejecting outright the private bus operators' participation, how can the PTC be complying with the last criteria of the Government's land transportation policy of giving the public a wide range of transport choices? It would appear that Mr Gwee had prejudged the outcome of the private bus operators intended participation in providing the commuting public with another choice by saying that the latter's involvement " does not necessarily mean better service or cheaper fares." Mr Gwee's view is not consistent with Economics 101. The underlying principles of Economics and the basis of a free market economy is the free competition between the different suppliers in providing the goods and services to meet the demands of consumers at the best cost and quality without the presence of any restrictions or restraints, especially the type due to government policies. Further the conditions that existed in the 1960's where there were 11 bus operators, as mentioned by Mr Gwee, are no longer the same. Recall the Hock Lee Bus strikes and other communist inspired chaos in society. Thankfully such conditions no longer exist. Rather than sticking to the view that the private bus operators intended participation will "not necessarily" mean better service or cheaper fares, the PTC should ask objectively what is the risk to the commuting public by letting such operators compete with the two incumbents. The PTC should show conclusively that the participation of the private operators is prejudicial to the public interest rather than to the bottom lines of SBS and TIBS. Further more there is no requirement for the state to fund the private operators. Although the PTC had claimed that its audit of the bus companys' operations showed that they have complied with most of the standards set, many readers, including myself feel otherwise. (I can recount my personal experience. A normal bus trip on TIBS bus to my son's school is about 12 minutes and yet on almost one third of the time my son takes between 45 minutes to one and a half hour before he could board and alight from the bus on his way home. Two Sundays ago, at Upper Bukit Timah Road, 3 TIBS 173 had passed by the bus stop at regular intervals before a TIBS 852 pulled up about 5 minutes after the third 173.) As for the comparison with the transportation systems with other countries, I think we ought to consider all aspects of the conditions in each country: the topography, population distribution, income level, the pace of life, the level of economic development, the competitiveness of the economy etc. (I am aiming this partly at Mr Philip Rowells's letter "Transport cost relatively lower here" (ST 20 Jun). In Britain Her Majesty's government dish out generous dole to the unemployed, but not here in Singapore where there is no social security for the unemployed and that public assistance in the most deserving case is less than $150 a month.) I am not sure about the respondents' experiences in the transportation system of other countries when Mr Gwee mentioned that "about 90 per cent of commuters polled thought that the public-transport system is efficient and reliable, and about 60 per cent considered it to be world-class." I think the PTC should note that the poll is about our "public transport system" and not about the bus services as provided by SBS and TIBS. There is also no mention if the 60 percent had comprehensive experiences to back their judgment. In any case, many readers have in the past complained about our taxis services, which incidentally are also run by SBS and TIBS, and that this compare unfavorably with Hong Kong. Singapore's MRT has also been shown to provide a lower standard of service than the Hong Kong counterpart. These observations were made in both the Straits Times and Business Times by Singaporeans who have had first hand experience in living and working in both places over a period of time. Returning to the PTC's claim that its audit of our two bus companies showed that standards of services complied with those laid down by the PTC. Perhaps the PTC's audit is not comprehensive enough. I agree with another reader that PTC should put it on its website or that of the Ministry of Communications and Information Technology exactly what standards SBS and TIBS have to comply to and PTC's method and scope of audit. Based on my own experiences, I cannot believe that the complaints about the bus services are unfounded. In summary, the financial results over the last three years of the main bus operator, SBS clearly show that there is no justification whatsoever for the PTC to allow the main bus operators to increase bus fares. If anything the said financial results clearly point to the fact that PAST bus fares increases also could not have been justifiable. The PTC's decision is also contrary to the policies of the Government and is also contrary to its own absolute bus operations service standards. Its rationale that additional bus operators "does not necessarily mean better service or cheaper fares" is based on obsolete assumptions and is not founded on basic economics theory. The many letters, which had appeared in both the Straits Times and the Business Times, unfortunately do not support the Lianhe Zaobao survey on commuters' satisfaction, which the PTC relied on. I call upon the PTC to make available for public scrutiny the deliberations, minutes of meetings and other written justifications which the PTC had relied upon to approve the bus fares increases over the last, say three increases. Cc: Mr Goh Chok Tong, Prime Minister Mr Yeo Choew Tong, Minister for Communications and Information Technology Mr Lim Boon Heng , Minister without Portfolio and Secretary General, National Trade Union Congress Mr Eric Gwee Teck Hai, Chairman, Public Transportation Council Dr Teo Ho Pin, President, Consumers Association of Singapore News cuttings for reference Jun 17, 2001 For drivers' sake, bear with hikes Lim Boon Heng says S'poreans should bear with increases as transport workers deserve salary increments too By Krist Boo SINGAPOREANS should bear with some increases in bus fares as transport workers, too, deserve to receive salary increments that others have been getting, Mr Lim Boon Heng said. The Minister Without Portfolio and National Trades Union Congress chief was sharing his view on the reaction from some commuters to the recent bus-fare hike, when he attended a grassroots event at the Ulu Pandan Community Centre last night. Speaking to some 560 residents who had gathered for a birthday celebration, he made it clear that he was not speaking out to defend the bus companies. But he noted that the fare increase was justified because salaries of bus drivers and other employees of bus companies went up by about 6 to 7 per cent last year. The workers have been getting more pay again this year, he said. 'If we can sympathise with bus drivers and other employees of bus companies and think that it's fair that they get a wage increase like we do, I suppose we have to bear with some increase in bus fares.' The issue on the fare hike became a talking point for many people here since news broke late last month that bus operators Singapore Bus Services (SBS) and Trans-Island Bus Services (Tibs) were seeking all-round higher public-transport fares. Early this month, the Public Transport Council agreed to an 10-cents fare increase on feeder services, but turned down the proposal for a sweeping fare hike. Private bus operators are asking to be allowed to offer feeder services at lower rates. Mr Lim said: 'There are some people who express great unhappiness over this bus-fare increase. Some argue that the bus companies are making a lot of money, so there's no justification for a fare increase.' He added: 'For every $1 a bus companys collects, it pays 50 cents to its drivers and employees. If wages go up 5 per cent, then bus fares must go up, on average, 2.5 per cent.' The fare increase on the feeder service is between 16 and 22 per cent. He said: 'They cannot increase 2.5 per cent for every type of journey. If they charge 10 cents on some routes, it may be too much. If they charge five cents, it may be too little. 'So they have to find some way of increasing it, and they have decided to do it on feeder-bus services this time. It's as simple as that.' Jun 18, 2001 Fare hike affects only 6% of passenger trips THE Public Transport Council (PTC) would like to thank all your readers for their feedback on the recent fare-revision exercise. Any proposal to increase public-transport fares is bound to be controversial. The PTC recognises this and, in every fare application review, tries to balance as best as possible the interest of public-transport commuters with the need for public-transport operators to remain viable. To safeguard the interest of commuters, the PTC has a set of quality standards that public-transport operators must meet. This includes minimum headways, maximum number of transfers allowed and provision of services to non-profitable areas under their 'universal service obligation'. The PTC recently completed an audit of bus services provided by Singapore Bus Services (SBS) and Trans-Island Bus Services (Tibs). The results show that SBS and Tibs have complied with most standards set out in the Basic Bus Service Specifications and Standards, and that there is a high level of bus service, especially in terms of service coverage, availability and frequency. In considering an application for fare increase, the PTC reviews the operating cost of the operators and whether a fare revision is necessary for them to remain viable to continue to make long-term investments in their services. The bus companies need to earn a reasonable return to be able to upgrade and replace their buses and equipment, and to serve commuters better. The PTC has been stringent in scrutinising the fare proposals from operators. While wages have increased by about 15 per cent over the last three years, fare revenues have gone up by between 1.5 per cent and 2.4 per cent over the same period. In a labour-intensive industry like transportation, where manpower costs make up 50 per cent of operating costs, the operators have demonstrated that they have been achieving efficiency gains and have been able to keep costs down despite the greater increases in wage levels. Lower feeder fares were introduced in the 1970s to minimise the cost of transfer for commuters. Since then, the introduction of the magnetic farecard in 1990 has allowed the operators to provide a transfer rebate; this provision has allowed PTC to align feeder fares with trunk fares gradually, without raising the cost of transfers. Feeder services use the same resources as trunk services, hence there is a need to correct the anomaly in the feeder-fare structure. The 10-cents increase in feeder fares has no impact on passengers who make transfers to other bus services or the MRT/LRT using the farecard as the transfer rebate has also been raised correspondingly by 10 cents. This means that the net feeder fare remains unchanged at 35 cents for passengers who make transfers. As a result, about 94 per cent of passenger trips are not affected by the fare-revision exercise this year. Some readers have called for free competition in the bus industry. It should, however, be recognised that this does not necessarily mean better service or cheaper fares. Until the 1970s, we had as many as 11 public bus companies; as a result, many of the bus services were unreliable, routes were fragmented and buses were old and poorly maintained, with operators plying mainly busy routes while several other areas were poorly served or not served at all. The PTC has, under its present framework for the provision of public bus services, allocated various service territories to SBS and Tibs as operators need to have a variety of routes to balance unprofitable areas with profitable areas. This is to enable them to adhere to the overall high standards of service that are expected of them by commuters and required of them by PTC. This includes provision of whole-day bus services to serve every HDB town and to meet the standards on frequencies and coverage that the PTC has set. For feeder services, there is also the provision that the last bus service must start at the interchange after the last train in order to take passengers home. The PTC cannot allow operators to pick profitable towns or routes for standalone services within this framework, as that will lead to a situation where bus operators will concentrate on serving only where it is profitable, and neglect the unprofitable areas or routes. Ensuring that all areas of Singapore have a high standard of public transport is the core consideration of the PTC. The present framework has served commuters well. This was borne out recently by a Lianhe Zaobao survey on commuters' perceptions of the Singapore public-transport system. About 90 per cent of commuters polled thought that the public-transport system is efficient and reliable, and about 60 per cent considered it to be world-class. As pointed out earlier, about 94 per cent of passenger trips are not affected by the feeder-fare increase, and those who make transfers continue to pay the same net feeder fare of 35 cents. Commuters enjoy a seamless service, notwithstanding transfers between the different modes of transport, because of the integrated ticketing system implemented by the three mass public-transport operators, using a common farecard and rebate mechanism. Standalone feeder services go against the objective of a seamless integrated transport system that gives maximum convenience to commuters. ERIC GWEE TECK HAI Jun 19, 2001 No fare increase for 94% of passengers I REFER to the recent letters in The Straits Times on the feeder bus fare alignment. SBS understands the public's concerns about the impending alignment of the feeder fares, especially given the current economic climate. Nobody likes any price increases, however small, despite the fact that the fare alignment will affect only a small minority of the commuting public. This is because commuters are given a corresponding increase in transfer rebate, which effectively means no fare increase for about 94 per cent of the total number of passengers. Readers have expressed various concerns in their letters. SBS is aware that it would be difficult to address all the issues raised to everyone's satisfaction, but it will attempt to put things in perspective. Bus operation is labour-intensive. Manpower costs make up more than half of operating costs. The company needs 2.7 staff just to put one bus on the road. This includes bus captains, mechanics and operations staff. This staff-per-bus ratio is one of the lowest among bus operators in the world with a similar scale of operation. Like all other workers, it is only reasonable that bus captains be paid adequately. Indeed, the job of a bus captain is not easy. They are required to work odd shift hours - having to leave their homes as early as 3.30 am for the first shift and to work well past midnight for the last shift. They also have to work in a stressful environment, attending to customers and shouldering the heavy responsibility of providing a safe journey. That is why the company has to pay competitive wages in order to recruit and retain bus captains for a job position that is difficult to fill. In the past two years alone, SBS' wage costs have increased by 10 per cent. In contrast, bus fares have gone up marginally, by slightly more than 1 per cent. In fact, the last fare adjustment and the current feeder-fare alignment cover only part of the manpower-cost increases, not to mention other cost increases such as fuel, repair, maintenance and spare parts. To mitigate the cost increases, SBS has all along been exploring ways and harnessing technology to make its bus operations efficient. However, major productivity-enhancement measures, such as implementing 'one-man- operation' in the 1980s, are getting fewer, and further improvements will be more difficult. Service improvements do not come about only when fares are adjusted. SBS' policy is to make continual improvements to enhance the level of service regardless of whether there is a fare adjustment. These improvements include better and more modern air-conditioned buses, cashless fare-payment system and better service information such as Service Guides and Town Bus Guides. With regard to TVMobile, I would like to dispel some misconceptions. TVMobile is a value-added service introduced for the benefit of commuters. The provision and maintenance of TVMobile is borne fully by MediaCorp at no cost to SBS. All advertising revenue derived from TVMobile belongs to MediaCorp. I thank all the writers for their views. CHENG LAY TIN Jun 20, 2001 Transport costs relatively low here HAVING just returned from a trip home to England, I could not help but be amused by the recent letters condemning transport costs here. From Heathrow Airport to central London, a train trip costs 12 (S$30). A tube trip of only one stop costs 1.70. Can anybody here imagine paying $30 for public transport from Changi to town, or $4.25 to travel from Bugis to City Hall on the MRT? Buses are no cheaper. Every trip in central London, of even one stop, costs 1. Not on a nice, shiny new air-conditioned bus, mind you, but a shuddering, smelly red antique from the 1950s. In the provincial town where my parents live, the short bus trip into town costs 1.40. For those who prefer independent transport, prepare to weep.Petrol costs 80 pence a litre; up to 90 pence in many places. Parking in central London starts at 7.50 just to enter the car park, then 3.75 an hour after the first two hours. Singapore has its faults, perhaps, but high transport costs are certainly not among them. Now if they could only do something about the price of beer... PHILIP ROWELL |
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