With huge sums of money being pumped into expanding the public transport network, the formula for calculating train and bus fares is set to change.
The formula for public transport fares from this year to 2022 will include a new component that reflects the growing network capacity and ridership.
"A widening gap between cost and fares is not sustainable for any public transport network," said the Public Transport Council (PTC), which announced the change yesterday.
While PTC said it was too early to commit on whether this new component would mean a fare hike at the next review in the third quarter of this year, it pointed to the need to keep the system sustainable.
Nearly 1,000 buses and 200 trains were injected into the network to build up capacity between 2012 and last year, it said. "These capacity upgrades and network expansions are necessary and have been welcomed by commuters. However, they come at a cost," said the PTC. Under the old formula, it said, the fares were not reflecting these costs.
Annual operating costs increased by more than $900 million between 2012 and 2016, while fare revenue increased by only $230 million during that time, mainly due to rising ridership.
While government subsidies have helped make up the shortfall, it cannot be sustained if it keeps widening, said the PTC. Fares, in fact, have fallen for the past three years along with energy prices, it said.
The new component, called network capacity factor, compares network usage against the capacity added. If the capacity increases faster than ridership, a higher fare hike could be allowed.
PTC chairman Richard Magnus said consultations with numerous commuters showed that "most were discerning enough to notice the improvements" made to public transport and were expecting a fare increase as a result.
"Of course, we will need to bear in mind the affordability for commuters," he said.
In a Facebook post yesterday, Transport Minister Khaw Boon Wan said the introduction of the network capacity factor was a "sensible" move.
"As the network expands or intensifies in response to changing commuter demand, it impacts the financial sustainability of the transport system," he said.
"When changes are significant, some adjustments to fares, whether upwards or downwards, will ensure fairness between taxpayers and commuters."
Earlier this month, he had hinted at a possible fare hike by highlighting the need to maintain a high-quality transport system.
Yesterday, the PTC also announced that from the end of the year, commuters will no longer face additional boarding charges within 15 minutes of transferring between two different MRT or LRT stations.
Government Parliamentary Committee chairman Sitoh Yih Pin welcomed the announcements.
"The completion of both the fare formula review and the review for the transfer rules bear the commuters' welfare and the financial sustainability of our public transport system at heart," he said.
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