Bus, train fare formula to be reviewed; any changes will be applied from 2023

Any changes to the public transport fare adjustment formula and mechanism will be applied from 2023 onwards, said the PTC. PHOTO: ST FILE

SINGAPORE - The way that bus and train fares are calculated will be reviewed to account for changes in commuting patterns, and to balance fare affordability and the financial sustainability of the public transport sector.

The Public Transport Council (PTC) said this on Monday (Aug 15) as it announced the start of its review process, aiming to complete it by the first half of next year.

Any changes made to the public transport fare adjustment formula and mechanism will be applied from the fare review exercise in 2023 onwards, the PTC added.

It will be consulting commuters, public transport operators, the labour movement and transport experts for the review.

The current formula will remain for the upcoming fare review later this year.

The formula puts a cap on how much public transport fares here can be adjusted each year. It comprises five component indicators that take into account core inflation, energy prices, wage increases, productivity and the network capacity of the public transport system.

The formula is typically reviewed once every five years, said the PTC, which is led by Nominated MP Janet Ang, and comprises 16 other members from academic institutions, business, grassroots organisations, labour unions and professional services who are appointed by the Ministry of Transport (MOT).

The last time there was a formula review, the network capacity factor (NCF) was introduced in 2018 to better reflect operating costs borne by public transport operators due to capacity adjustments - such as running more trains and buses over longer distances for less crowded and more convenient rides, for instance.

The PTC on Monday laid out the terms of reference for its latest review.

It will first look at the effectiveness of the current formula, in consideration of the changes in the public transport industry and commuting patterns.

Last year, former PTC chairman Richard Magnus highlighted the growing phenomenon of people working from home, but said then that the long-term trend is still not clear.

Due to Covid-19, public transport ridership in Singapore fell to as low as 25 per cent of pre-pandemic levels during the circuit breaker in April and May 2020.

While numbers have since bounced back after pandemic restrictions were largely eased, they are still below pre-Covid-19 levels.

The PTC said it will also propose ways to better balance keeping fares affordable with ensuring the financial sustainability of the public transport system.

This issue came up in Parliament earlier this year during the debate on MOT's budget, when Transport Minister S. Iswaran and Workers' Party MP Jamus Lim engaged in a lengthy exchange over whether public transport could be made free for all seniors and people with disabilities.

Mr Iswaran pointed out that the Government currently spends more than $2 billion annually in subsidies for public transport commuters - about $1 billion for bus operations and $1 billion for train ones.

He also noted that shifting work and travel patterns, an ageing population and volatile energy prices will impact public transport over the next decade.

The formula puts a cap on how much public transport fares here can be adjusted each year. PHOTO: ST FILE

In December last year, bus and train fares were raised by 2.2 per cent - or three to four cents for adults and one cent for seniors, students, people with disabilities and low-wage workers.

This was because of a 4.4 per cent fare hike that was carried over from 2020.

The maximum allowable adjustment last year was actually -2.2 per cent based on the current formula.

The fare increase could have been much higher at 51.5 per cent had the PTC not excluded the NCF in the formula for 11 out of the 12 months in 2020 to account for the exceptionally sharp drop in ridership due to Covid-19.

The PTC has said that it will continue to exclude this drop in ridership when calculating the NCF for this year's fare review.

Singapore University of Social Sciences transport economist Walter Theseira said the PTC could consider during its review whether the NCF needs to be reworked and whether the fare formula could take into account more current indicators rather than those from previous year, especially in a time of rapid, transitory inflation.

While the PTC is also looking at how to better balance the books, Associate Professor Theseira added that the question of whether there ought to be a deficit incurred for public transport, and how this deficit is shared between commuters and taxpayers, should be dealt with by the Government instead.

“These are questions with no easy answers and the PTC is not equipped, nor has the mandate, to make these types of decisions,” he said.

Join ST's Telegram channel and get the latest breaking news delivered to you.