1 August 2006 – Due to significant cost increases, led by the continuing rise in fuel costs, SBS Transit has applied to the Public Transport Council (PTC) for bus and rail fare adjustments.
The application is in line with the formula recommended by the Fare Review Mechanism Committee. Based on a change in the Consumer Price Index of 0.5% and Wage Index of 3.5%, the formula allows for fares to increase by up to 1.7% this year.
The decision to seek a fare increase was taken after much deliberation by the company. We are aware that fare adjustments impact a large part of the commuting public and weighed that fact heavily against the significant increase in costs. In the end, the financial impact of the rising costs proved too large.
However, we are mindful of the impact that any fare adjustments will have on the lower income households. As such, children and student fares and concession passes will not be affected by the adjustment. In addition, depending on the final fare adjustment allowed, SBS Transit will also be introducing schemes to help the lower income offset the impact of the fare adjustments. At a 1.7% increase, most adults travelling on our buses and trains will see only a 1-cent or 2-cent increase for each trip. Only about 3% of all trips will see a 3-cents increase.
In the last year, energy costs have risen by over 40%, or nearly $30 million, compared to the year before. From the end of last year, we have been further required to use only ultra-low sulphur diesel which costs more. This alone will increase our fuel costs by another $2.2 million a year. At $101 million, or 18% of total operating costs, energy costs have become our largest expense after manpower costs. Manpower costs, which makes up about half of our total operating costs, increased by 3% in the annual increment exercise in January this year or another $6.2 million per year. As such, a maximum 1.7% fare adjustment, which will yield $9.9 million for a full year, will only provide partial relief for the increased cost pressures we face.
Despite the high costs of operation, SBS Transit has continued introducing many new services to cater to commuters’ needs. Last year, a record 24 new bus services were launched – six of which were the result of consultations with grassroots organisations to better address the transport needs of their residents. New niche services including Chinatown Direct and Fast Forward have also been introduced to provide commuters with faster and more efficient travel options.
While the company is still profitable, a fare adjustment is necessary also to ensure that it continues to earn sufficient money to be able to invest in its operations so as to improve its services. Buying new buses, for instance, costs money. Last year, we purchased 150 new air-conditioned, double-deck buses which are also low-floor and wheelchair-accessible. These 150 buses cost about $75 million. This year, we have just recently exercised our option to buy another 50 of these buses which will cost another $25 million. These investments do not come cheap and will be difficult to contemplate for any loss-making operator.
But these investments in new buses are necessary in order to provide new services, cut down on waiting time for our commuters and meet our obligations required in the new Quality of Service Standards.
In our rail business, we have also continued to fine-tune and improve our service offerings. For example, to improve morning peak travel, we have added two more trains to the fleet of 16 to reduce the waiting time for commuters.
And it’s not just our operations that have been continually upgraded. In May 2006, we relaunched our website (www.sbstransit.com.sg) to make it more commuter-friendly. A whole new range of e-services is now available to all our customers including:
- Downloadable credit-card sized timetables and computerised mapping to illustrate a service’s route
- Journey planner with estimated travel time based on either the cheapest or quickest way or one with least walking involved; and
- Emailing free service updates and promotions
We will continue to look at new ways to improve our service offerings in a cost-efficient manner.
More details of the application, which is subject to the approval of the PTC, will be announced at a later date.