Taking the public transport these days is great. You get to be really close to other Singaporeans and you certainly make contact with many foreigners....physical contact. You learn to push and you learn to push back. SMRT is certainly very efficient these days - they transport more people per train than ever before. SMRT is excellent because of the profits it makes - the more profits the better they become. No wonder Raymond Lim is so agreeable to fare hikes that boost SMRT's bottomline- all he wants is for Singaporeans to have better public transport. Raymond Lim also tells us that going private has resulted in cost savings - it is strange that I don't remember SMRT ever cutting fares with those cost savings....if there is so much cost savings why do they need to raise fares? The answer is very simple - "profits drive SMRT to excel". Raymond Lim also tells us that SMRT has the lowest cost per passenger among 9 international rail operators. How do you lower the cost per passenger - pack more passengers into each train! The other 8 "international operators" probably have trains with plenty of seats for passengers and space to swing their arms about - see how inefficient other public transport operators are compared with the SMRT - they probably pack half the number of people into each train compared with the SMRT.
Given the high cost of cars and taxi fares in Singapore, most SMRT passengers won't have other options during peak hours. You can pack them anyway you want for higher cost savings and bigger profits. In Singapore Inc, we should never trade profits away for something else because it is profits that drive us to be excellent.
"Together...Excellence for Singapore" - 1986 National Day Slogan
From the way our monopolistic GLCs operate and churn out higher profits year after year you can tell that PAP is indeed an excellent govt.
Public transport: Re-look fare-driven business model
THE Singapore Mass Rapid Transit (SMRT) corporation and ComfortDelGro have submitted their applications for fare adjustment to the Public Transport Council on Aug 1.
The SMRT reported first-quarter operating profits of $48m while ComfortDelGro reported first half-year operating profits of $126m for the period ending on June 30.
SBS Transit, the listed local rail and bus arm of ComfortDelGro, reported first-half year operating profits of $24m for the same period.
In their most recent full financial year, SMRT and ComfortDelGro made operating profits of $178m and $335m respectively, while SBS Transit posted $53m.
The fare adjustment application is not timely. In fact, the whole idea of the fare adjustment mechanism is flawed. Both SMRT and ComfortDelGro cited rising fuel prices and increasing operating costs as the main reasons for their application. Which business in Singapore does not face these problems? Many companies reported severe losses during these turbulent times and can they pass on the cost increases to their customers?
The SMRT is dependent on the local rail and bus segment for more than 65 per cent of its operating results, while ComfortDelGro derived 60 per cent of its operating earnings from overseas operations.
It is timely to review SMRT's business model by growing its non-fare income stream without adding an extra financial burden to the poor commuting public suffering from shrinking disposable income due to inflation.
The Government's efforts to drive more motorists onto trains and buses through its electronic road pricing strategy seems to have paid off, judging by the increase in train ridership.
Train ridership jumped significantly over the past six months and full year ridership is expected to dwarf last year's.
Without granting an increase in fare, the operating profits of the transport operators are bound to increase due to higher revenue and economies of scale.
In the short term, the application for fare adjustment should be stayed while the Government works closely with the two transport groups to re-invent their business model.
In the long term, maybe they should be revamped towards a cost-based model and differentiate the rail and bus segments from their other market-driven commercial businesses.
If viable, surplus from these other segments could be ploughed back to subsidise the rail and bus segments since they are riding on monopolistic gains in the captive public transport market.
That could possibly bring about lower fares without compromising ridership comfort and quality, and achieve the grand policy goal of lesser cars on the roads.
Ee Teck Siew