Important to maintain cost and fare discipline

We thank Mr Goh Kian Huat for his letter (Monitor financial status of bus packages to ensure effective operations; May 4).

Our public bus industry transitioned to the bus contracting model in September last year, and we raised service levels in tandem. Most bus services now run more frequently than before, in particular during the morning and evening peak periods.

These service improvements come at a cost, and government subsidies have increased. Over the next five years, the Government expects to subsidise public bus services by around $3.5 billion to $4 billion, net of fare revenues.

Competition under the bus contracting model may yield cost efficiencies over time. Indeed, the bids have become more competitive over the course of the first three bus packages.

At the same time, the Land Transport Authority, as the central bus planner, regularly reviews bus services to better serve changing commuter needs and ensure financial viability.

For example, the ridership and cost recovery of some bus services have dropped because of the introduction of new MRT lines or changes in travel patterns. These services might need to be rationalised in due course.

For financial sustainability, fares also need to be regularly adjusted to keep pace with costs.

As Mr Goh pointed out, the Public Transport Council has commenced its review of the fare formula and mechanism, and this is expected to be completed by the first quarter of next year.

The review will take into consideration the recent developments in the public transport industry, including the increased subsidies funded by taxpayers.

Lina Lim (Ms)

Group Director,
Policy & Planning
Land Transport Authority

A version of this article appeared in the print edition of The Straits Times on May 19, 2017, with the headline 'Important to maintain cost and fare discipline'. Print Edition | Subscribe