Rail reliability not linked to fares to avoid punishing operators when they need funds the most: Khaw
SINGAPORE — The Public Transport Council (PTC) had mulled over including rail reliability into the formula for calculating public transport fares, but ultimately decided against it, Transport Minister Khaw Boon Wan said in Parliament on Friday (May 18).
This was partly because reducing fares in the face of an unreliable rail system would mean withdrawing resources from the operators when they, in fact, need to inject more funds to fix the system, said Mr Khaw.
The minister was responding to Workers' Party Non-Constituency Member of Parliament (MP) Dennis Tan, who asked if the Transport Ministry would consider including a measure of train reliability into the fare formula to incentivise operators to improve services and manage commuters' expectations.
"When a system is very unreliable, in fact, that is the time to pump in more resources," Mr Khaw said. "And because of that, you punish them through reduced fares; you are withdrawing resources from the operators and you'll be doing exactly the opposite, the wrong thing."
While he noted the importance of rail reliability, Mr Khaw said it should be dealt with separately.
"I deal with it directly myself through the sort of focus and pressure I exert on the operators," he assured the House.
In March, the PTC announced a revised fare formula, introducing a new component which takes into account changes to operating costs.
Called the Network Capacity Factor, this component tracks the structural changes to operating costs, resulting from changes in capacity and usage attributed to the growing rail network.
This means that with the new factor, fares will increase if the capacity growth in the public transport network outstrips ridership growth.
The latest revision to the formula will be applied from this year until 2022.
Mr Khaw noted that public transport capacity has risen about 25 per cent in the last five years, following the addition of more than 1,000 new buses and 200 new trains. Over the same period, however, commuter demand rose by less than 10 per cent.
He added that the Network Capacity Factor curbs the limitations in the previous fare formula, which measured adequately the changes in the price of resources consumed, but did not account for changes in quantity.
Between 2012 and 2016, transport operators saw their annual operating costs climb by over S$900 million. The growth in fare revenue of about S$230 million over the same period, however, covered only over a quarter of the increase.
The Government has stepped in to make up for this shortfall through subsidies, Mr Khaw said.
Nee Soon Group Representation Constituency MP Lee Bee Wah asked if service standards of the operators could be computed into the fare formula.
Mr Khaw replied that it was "indirectly" a part of the formula via the Network Capacity Factor. For instance, if demand balloons while the rail network does not expand, resulting in congested trains and more uncomfortable rides, the factor will be negative.
"Everything being equal, the PTC will be asking for a reduction in fares… to counter this reduction in service levels," he said.
Mr Khaw stressed that fares fluctuate and they cannot always decrease, because manpower costs form a large part of operating costs.
This is especially so as the Republic beefs up maintenance of transport assets by hiring more engineers, mechanics and technicians. "All those come with money," Mr Khaw said.
"It is not realistic to hope that you get a good, first-class reliable train (system) with no need for any injection of resources," he added.
He reiterated that over time, public transport affordability has improved. Over the last decade, the proportion of household income spent by the lower-income group on public transport each month fell from 4.2 per cent to 2.7 per cent.
Overall, Mr Khaw stressed that Singapore's public transport fares were "not outrageous at all" when compared with those in cities such as New York and London.
"I think Singaporeans in their heart, when they travel, they know (this), because the PTC told me they do fairly frequent focus-group discussions with commuters, (asking), 'do you find fares reasonable?' And actually, most of them said that it is so."
