Raise fares to improve train service

Many people are asking what is the root cause of SMRT's frequent train breakdowns and who is to blame.

My answer: the Public Transport Council (PTC) that regulates fare hikes.

The fare hikes are miserly compared with the rate of inflation.

SMRT's 2014 financial report shows that although revenue increased, many financial indicators - such as profits, return on assets, return on equity, free cash flow, earnings per share and dividends per share - had been falling for five straight years. In fact, free cash flow was negative last year.

Borrowings were up significantly from 2013. Fare margins were down for five straight years, too, and negative in 2014. Non-fare margin, for businesses such as retail, on the other hand, was improving.

Unlike other companies, SMRT cannot shed its money-losing train business. Yet, it is yet expected to improve reliability even as the PTC moderates fare hikes to meet the demands of commuters, some of whom even want a freeze to fare hikes until reliability improves.

How is that possible?

Train fares in Singapore are low relative to gross domestic product per capita.

Raise the fares if we must, but continue to offer discounts to students and targeted assistance to the needy. The rest who happily use our latest flashy iPhones and Samsungs to kill time on the trains can surely afford a fare hike.

Jonathan Toh Joo Khai

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