Retail and advertising operations to be outsourced on Thomson-East Coast Line

A 2018 photo showing the first Thomson-East Coast Line train at the new Mandai Rail Depot.
A 2018 photo showing the first Thomson-East Coast Line train at the new Mandai Rail Depot.ST FILE PHOTO

SINGAPORE - The rights for retail and advertising on the upcoming Thomson-East Coast Line (TEL) have been outsourced, as part of efforts to improve the line's financial sustainability, the Land Transport Authority (LTA) said on Tuesday (Aug 27).

This marks the first time non-fare businesses, which are currently run by MRT operators, have been outsourced.

The move is expected to bring over $164 million in concession fees for the LTA over the 16-year concession term.

This will begin when the 43km-long TEL begins revenue service by the end of this year with the opening of the first three stations, which will be operated by SMRT.

"This will generate significantly more non-fare revenue per rider as compared to today, which will substantially improve the long-term financial sustainability of the TEL," said the LTA.

In February, Transport Minister Khaw Boon Wan noted that both SMRT and SBS Transit had chalked up operating costs significantly higher than their fare income in recent years, as a result of an enhanced operating and maintenance regime.

The advertising tender was awarded to Asiaray Connect, which put in a "competitive bid" with more than $140 million in concession fees over the concession term, the LTA noted.

 
 
 

Asiaray Connect is a subsidiary of Chinese firm Asiaray Media Group, which focuses on airport and metro line advertising.

The LTA noted that Asiaray's proposal featured both digital and static media tailored to each station, with the use of technology for "dynamic and responsive advertisements that can adapt quickly to the fast-changing preferences of commuters".

Meanwhile, the retail operator tender was awarded to a consortium of three firms - SMRT Experience, JR Business Development SEA and Alphaplus Investments - with a bid of $24 million in concession fees over the concession term.

SMRT Experience is the retail and advertising arm of transport operator SMRT - which in 2017 won a $1.7 billion contract to operate the TEL for nine years - while Alphaplus Investments is an investment firm under NTUC Fairprice.

JR East Business Development SEA is a subsidiary of Japanese rail giant East Japan Railway Company.

"The consortium's proposal includes well-designed retail spaces with a thoughtfully curated tenant mix catering to commuters' diverse needs, including Cheers convenience stores at several TEL stations," said the LTA, noting this would maximise the revenue potential of retail spaces on the TEL.

The two were selected out of a total of seven proposals from both local and foreign firms, submitted between January and April this year.

"Tenderers were evaluated on the quality of their proposal, as well as their ability to grow the local non-fare business and generate more non-fare revenue from TEL advertising and retail spaces."

The authority added that given the promising outcome of this tender, it is now exploring how it can expand the outsourcing framework to other transport assets, so as to increase non-fare revenues further.

"This may include other rail lines, buses, bus interchanges, or road and pedestrian infrastructure," it added.