Govt to buy up buses to crack riding riddle
IN THE boldest move yet to shake up the public bus industry and raise service standards, the Government will take over the ownership of all buses and depots, collect fare revenue, and tender out bus routes to private operators.
Competition among bus operators will most likely hot up, with new players and foreign firms bidding for bus routes which, for now, are run by SMRT and SBS Transit.
The two publicly listed incumbents, which currently buy buses and collect fares set by the Public Transport Council, have been racking up hefty losses in their bus operations.
Despite spiralling costs and the pressure to operate more services, public transport fares had not been adjusted in the last two years until last month.
The switch to a "Government Contracting Model" later this year is aimed at ensuring that bus operators run more efficient bus services, without having to worry about fare revenue, especially for unprofitable routes, said the Land Transport Authority (LTA).
For commuters, this will mean buses will arrive more frequently and on time.
Transport Minister Lui Tuck Yew said in a Facebook post yesterday that the new contracts model would enable the bus industry to "respond more speedily to changes in ridership patterns and commuter needs and provide a better service to commuters".
The LTA also assured commuters that fares would continue to remain affordable.
Under the new contracts model, all bus services have to arrive within 15 minutes during morning and evening peak periods, with at least half arriving within 10 minutes. Feeder services will run at intervals of between six and eight minutes.
The Government will also offer cash incentives to bus operators who ensure their buses arrive at bus stops on time, but penalise them if buses arrive later, or even earlier, than scheduled.
Bus bunching and long gaps between buses have been a perennial bugbear, even as bus ridership climbed 3.4 per cent last year to 3.6 million a day.
Following efforts to boost bus fleets under the $1.1 billion Bus Service Enhancement Programme, bus frequency has improved by one to five minutes on average and buses are less congested, the LTA said recently.
Under the new contracts model, bus operators with the most competitive bid and best track record will be paid a fee to run the services for between five and seven years.
LTA will carve up bus routes into 12 packages, with about 300 to 500 buses for each area.
For a start, it will tender out three packages of bus services, with the first package going out in the second half of this year.
SBS Transit and SMRT will run the remaining nine packages, which comprise about 80 per cent of existing buses.
In the long run, LTA expects three to five operators to run the bus services islandwide.
The Government started experimenting with bus contracting last year when it tendered out over a dozen fixed routes - a mix of express and feeder services.
The rail industry was opened up when the Government awarded the Downtown Line tender to SBS Transit in 2011.
Going forward, existing lines, as well as new ones such as the Thomson Line and future Eastern Region Line, will be tendered out.
Cedric Foo, who chairs the Government Parliamentary Committee for Transport, said introducing more contestability in the bus industry would create market discipline.
"With contracts up for review every five years, the fear of (contracts) not being renewed will keep operators on their toes," he said.
But Mr Foo, who has championed the opening up of the industry since 2007, said that putting contracts up for tender would make the cost and subsidies transparent, creating a double-edged sword.
"With people aware of the cost elements, there will then be political pressure on the Government not to increase fares, although it will allow the Government to better justify how and why they need to adjust fares."