Tower Transit clinches two bus route packages for $1 billion

Operator Tower Transit yesterday clinched a $1.03 billion contract for two bus packages, which include routes in Sembawang and Yishun currently run by SMRT.

The Land Transport Authority (LTA) awarded Tower Transit Singapore (TTS) a five-year contract for the Bulim and Sembawang-Yishun packages, which cover 56 bus routes.

The contract will begin from the second quarter of next year, and is a gain for Tower Transit as it expands its footprint in the transport landscape here.

Tower Transit will also continue to manage Bukit Batok and Jurong East bus interchanges, which are part of the Bulim package it now runs, as well as Sembawang and Yishun bus interchanges, which are currently managed by SMRT.

The LTA said Tower Transit's bid had received the highest total score after factoring in price and quality factors.

The roughly 320 buses in the Bulim package ferry commuters in Clementi, Jurong East and Bukit Batok along 29 routes. The Sembawang-Yishun package comprises about 400 buses plying 27 routes.

The change in operator means SMRT drivers involved in these routes will be offered a job by Tower Transit.

Guidelines stipulate that Tower Transit's employment terms cannot leave the drivers worse off than their current agreement with SMRT.

The tender, called last November, was the first time the LTA concurrently called tenders for two packages, which it said could achieve "economies of scale".

Operators submitted a bid for the combined package, and also bid for each bus package separately.

Under the bus contracting model, the Government owns all operating assets and collects fare revenue. Transport firms bid or negotiate to run route parcels for a fixed sum over a fixed period.

Singapore University of Social Sciences (SUSS) transport economist Walter Theseira said the final bids bore this aim out.

"It looks from the bids that TTS was able to promise this to a greater extent than some of the competitors... But all parties did incorporate a discount for the joint bid compared with the single bids," he said.

Tower Transit bid $482 million for the Bulim package, $582 million for the Sembawang-Yishun package, and $1.03 billion for the combined one.

SMRT bid $540 million for the Bulim bus package, $700 million for the Sembawang-Yishun bus package, and $1.19 billion for the combined one.

On TTS' almost doubling of its bus routes, SUSS transport researcher Park Byung Joon said it would have been a very different story if SMRT and SBS Transit had won, suggesting that it "would have been the end of bus tender in Singapore" and the return to the era of having only two bus operators.

"TTS is not and will never be in the position to compete with the two local giants," he said. "TTS is going to be as big as what LTA is going to allow them to be."

This article was edited for clarity.

A version of this article appeared in the print edition of The Straits Times on October 01, 2020, with the headline 'Tower Transit clinches two bus route packages for $1 billion'. Print Edition | Subscribe