In considering any fare adjustment, the Public Transport Council (PTC) has to balance the interests of commuters against the long-term viability of the public-transport operators (PTOs).

The PTC is guided by the Fare Review Mechanism implemented in 2005. Fare adjustments are determined by a price-cap formula pegged to macroeconomic factors, namely changes in the Consumer Price Index and average monthly earnings. This formula protects commuters' interests by capping the maximum allowable fare increase and not leave it to the operators to decide what the market can bear.

The Fare Review Mechanism also gives PTC the flexibility, before approving fare increases on the basis of the price-cap formula, to vary the fare adjustment or to reject it when there are extenuating circumstances due to adverse economic conditions or significant deterioration in affordability.

The PTC noted that the economic outlook is favourable, with GDP growth forecast at 7-8 per cent and low unemployment of 2.3 per cent.

Fares have also remained affordable for the majority of commuters. The public-transport affordability indicator has been on a downtrend for the last four years. This indicator tracks the proportion of household income a characteristic family representing the average public-transport user spends on public transport.

To further ensure that commuters' interests are protected, the PTC also looks at the PTOs' return-on-total-assets (Rota) values as a reality check. The PTC concluded that while our bus- sector performance is in line with that of other companies with a similar industry structure and risk profile, our rail industry is doing much better. Taking all these into consideration, the PTC decided to approve an increase in bus fares only and not for rail fares.

As for senior-citizen concession fares, senior citizens pay a flat fare which is pegged to the lowest adult fare band. However, unlike other commuters, senior citizens pay a flat concession bus fare, regardless of the distance travelled.

While the Fare Review Mechanism keeps fares affordable to commuters in general, help is given to low-income groups using a targeted approach. The Government and the PTOs have set aside $3 million in public-transport vouchers which low-income households can apply for. The 100,000 vouchers should be adequate based on past take-up.

PTC members are drawn from a cross-section of society which facilitates a wide representation of views from the public. Many of the PTC members are regular users of public transport.

More information on the PTC's deliberations in granting the fare increase is available in the news release on the PTC's website: www.ptc.gov.sg .

Looi Teik Soon
Secretary
Public Transport Council