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​Fare hikes likely in the next few years, experts say

Published on: 31-Oct-2018

​With the latest fare hikes to kick in from Dec 29, transport analysts told TODAY that commuters can only expect train and bus fares to go up in the years ahead.

This is mainly because of an ongoing expansion of the MRT train network, which will only add to the costs that will eventually be passed on to commuters.

They echoed what Mr Richard Magnus, chairman of the Public Transport Council (PTC), said as he announced the fare hike, that fare reductions are “a no-no” in the next fare review exercise, considering that the “public transport environment” has changed and costs have changed.

However, the analysts stressed that they do not expect the fare increases in the coming years to be drastic, and that they will likely come in “tolerable” and “acceptable” forms, seeing how the latest fare hike is being rolled out.

The 4.3 per cent hike translated largely to a six-cent increase in standard card fares, and a one-cent increase in concessionary card fares.

The six-cent hike will impact 3.2 million of 4.8 million — or two-thirds — of the journeys on Singapore’s public transport network daily, while the one-cent hike will affect close to 20 per cent, or 900,000 rides, daily.

GIVING COMMUTERS ADVANCE NOTICE

Transport economist Walter Theseira, an associate professor from the Singapore University of Social Sciences, said that it is the “responsible thing to do” for the PTC to warn people of likely increases in fare rates in the near future, since it is “reasonable to predict” that the new “network capacity factor” (NCF) will continue to feature significantly when calculating the amount of fare to be adjusted.

The NCF tracks how much bus and rail capacity has changed in relation to real usage, and it contributed the most to this year’s fare hike at 3 percentage points of the 7.5 per cent increase the new formula allowed, which was brought down to 4.3 per cent owing to a carry-over reduction of 3.2 per cent from last year's review exercise. It showed that capacity growth in the transport network outstripped ridership growth.

This is because of the expanding service coverage for passengers with the addition of trains and buses to the overall public transport network, coupled with plans to continue building more rail lines to build better connectivity and bring better quality of service for commuters.

The rail network is expected to double in length from 178km in 2013 to about 360km by 2030.

Mr Magnus pointed out that the latest review exercise excluded from the NCF calculation the 16-station Downtown Line 3 — which opened in Oct last year linking Chinatown to Sungei Bedok — and the four-station Tuas West Extension to the East-West Line, which opened last June.

However, they will soon be taken into account because the fare formula will take into consideration changes to operating costs, capacity and usage of new lines 18 months after they open for service, when ridership stabilises.

What was included in this year’s fare review exercise were the six-station Downtown Line 1 that connected Chinatown to Bugis, and the 12-station Downtown Line 2, which serves the Bukit Panjang and Bukit Timah areas.

Others that will be included some time in the future are a 31-station Thomson-East Coast Line that will open in phases from next year, a 24-station Jurong Region Line that is expected to open in three phases starting from 2026, a Cross Island Line being planned at the moment that cut across the Singapore island between Changi and Jurong, as well as additions to the existing lines.

Dr Theseira said that it is “hard to predict” if the NCF will be more than the existing 3 per cent at future fare reviews, though he believes that it will “more or less” remain at that level.

FARE HIKES WILL BE TOLERABLE WITH BETTER RIDES

Dr Terence Fan, an assistant professor of strategic management (education) at the Singapore Management University, foresees that future fare hikes look to be “concentrated at 10 cents at most” when applying the present fare formula, so the increases are “not going to be unreasonable”.

“From what I see, they will come in a range commuters can tolerate… I don’t foresee major changes that will worry the public in a big way,” he said, adding that the fare increase for the disadvantaged group is not much felt in this round of fare hikes, since the Government will be giving 300,000 lower-income households vouchers worth a total of S$9 million to help them cope with the increases.

For the general public, Dr Fan said that an average 10-cent increase a trip increase is tolerable and doable at this point, arguing that commuters are getting better rides.

With the improvements to the public transport system, they have a better chance of getting seats on the train, and train carriages are less crowded.

“The level of service increased significantly for buses, while improvements are gradually being seen on the rail side,” Dr Fan added.

FARE ADJUSTMENT MECHANISM IS ‘EFFECTIVE’

Agreeing, transport researcher Lee Der-Horng from the National University of Singapore said that the NCF is “a proxy to reflect the level of service and even service reliability”, so a positive NCF does mean that there are overall improvements in public transport.

“I understand the public has many concerns over the NCF… However, if the capacity increase is not to be appreciated by the passenger, then NCF will not contribute positively to fare increase,” Dr Lee said.

“To me, the fare adjustment mechanism is effective and able to reflect the interests from relevant stakeholders,” he added.

Associate Professor Michael Li Zhi-Feng from Nanyang Technological University, who researches on network congestion pricing and car-lite solutions, believes that fare hikes will not continue to rise yearly until beyond 2030 when the rail network fully matures.

He is optimistic that a more comprehensive rail network that allows more efficient travel for commuters will compel more to see public transport as a “more acceptable”, “sustainable” and “more convenient” mode of transport.

“The population is growing at a slower rate, but so is green-consciousness and health-consciousness. Daily ridership should rise in tandem with the increase in network capacity.

“I believe that by then, public transport will truly be the dominant commuting mode.”


Similar coverage in Human Resources Online.


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