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    Sep 14, 2016

    Lower bus, train fares from lower energy costs?

    A DROP in energy prices could lead to cheaper bus and train fares being announced soon.

    Fares could be cut by as much as 5.7 per cent in the last quarter of the year. This is the maximum adjustment allowed under the Public Transport Council's (PTC) latest annual fare review exercise, which began yesterday.

    The PTC said the figure, which comes from a formula linked to economic factors, is "negative largely due to a reduction in energy prices". The council will now deliberate how fares should shift, taking into account requests from public transport operators. It said it will announce its decision in the last quarter of the year.

    When fares were last adjusted on Dec 27, they were cut by up to four cents for each journey, in line with the maximum 1.9 per cent allowed in the fare formula.

    PTC said yesterday that it will ensure fares "strike a balance between ensuring that the public transport system is financially sustainable and keeping fares affordable for commuters".

    For this year's fare review exercise, only the two rail operators, SBS Transit and SMRT, can ask for fare adjustments.

    This is because the bus industry has been restructured into a contracting model from this month. The Government now pays operators SBS, SMRT, Tower Transit and Go-Ahead a fixed fee to run bus services while it collects the fares and bears the revenue risk.

    The bus operators "are not directly impacted by fare revenue", the PTC said.

    The PTC added that it will obtain information from the Land Transport Authority, which tenders out the bus contracts, on the fare review.

    The current formula, valid until the end of next year, takes into account the previous year's changes in the inflation rate, wages and an energy index that charts oil and electricity costs.

    Both operators have until Oct 7 to submit applications for fare adjustments.