Thursday, August 28, 2008

Profit drive SMRT to EXCEL....!

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"Yes, I think they excel in packing people like sardines into crowded trains for more profits!" - Lucky Tan

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.

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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

17 comments:

Anonymous said...

Did you guys hear Teo Ser Luck explain the need for 16 gantries along the 9km KPE tunnel?

"Safety" was cited as the primary reason!

Wah lau... solid ah this guy. Hats off to him. I can't see how charging toll will prevent accidents!?

The garmen is really outrageous with their explanations sometimes. ERP along the Singapore River was meant to lower traffic cutting through the city! I mean... c'mon lah, which idiot ever comes into the city to get from East to West?
I'd rather they be outright and just say that they have to raise revenue because roadtax have been reduced. Or recover cost because the KPE tunnels cost billions to build.

Don't take citizens as fools lah. We're not 3-year old kids!

No wonder they don't dare to hold a by-election in Jurong... otherwise Slyvia Lim and her A-Team from WP will threaten to take over.

Anonymous said...

I think you got it all wrong. All fare hikes are in fact a must to feed for Lee Hsien Loong's pay of SGD 5 million a year... six times more than the American President... inflation? What inflation? Just ask Lee Hsien Loong take a 500% pay cut and Singapore will be alright.

Anonymous said...

I find the veto on yesterday's motion to amend by-election laws in GRC a farce. The vote was 62-5. All the NMPs and WP reps made up the 5, while the rest of the 62 were reps from you-know-where.

A result of The Whip?

Anonymous said...

Not enough opp to counter, so the PAP POW CHIAH Loh.

Anonymous said...

Public transport...SMRT/ComfortDelGro increase fares, who gain? of course the major shareholders from PAP cronies so u cannot said they r corrupted but legally.

Onlooker said...

Which lead me to wonder why all these Excellent ideas involve draining money from the people who produced the money :) Uniquely Singapore no?

Anonymous said...

No wonder civil servants got bo-chap attitude. No profit motive so don't care. Exception is LTA, which clearly has a profit motive. Thanks, Raymond Tan, for the explanation.

Anonymous said...

Finally, it is great that your satirical sense is back ! You must have been suffering from emotional trauma led by Dr Chee and his accomplices. Those "hooligans" really stir up trouble for the gahmen. Now that you recover, please continue to "praise" the government with all your might and wisdom.

Anonymous said...

This is a link to krugman's opinion page. He talks abt american welfare system (which is much better than singapore's) as though it is a disgrace. In other articles, he explains that the failure of the American welfare system is due to poor implementation which results in the rich coorporations benefitting too much from it, rather than because welfare is inately unaffordable. http://www.nytimes.com/2008/08/11/opinion/11krugman.html

Anonymous said...

Now, riding MRT can smell armpits, next, pubic.

Anonymous said...

riding MRTs is a good way for bonding with each other. sharing the same misery. the peasants can collectively cuss and swear at their govt. lol

Anonymous said...

This is another weird economic policy which is uniquely Singaporean.

A monopoly which is supported by an elected govt.

Of coz, any stupid economist will know that when a monopoly increases its price, demand won't change. Hence profits sky rocket!

The Logic:
Majority of Sporeans can't afford cars=> used taxis=>now taxis more expensive=>bus and mrt; BUT buses are inconvenient bcoz traffic jams and slow=>hence majority of Singapore sheeps opt to use mrt=> MRT customers are a captive market => mrt MUST increased price and none of you can do anything about it HAHAH!


Cheers
Economist with a heart :)

Anonymous said...

this morning ii took e mrttrain and grabbed a seat. although a pregnant lady came up in front of me shortly, ii did not want to give up m seat because ii would have no space to stand properly at all.

Anonymous said...

solution:if all of us will make an effort to fart more in the train, maybe people will then be willing to turn up in hong lim to protest and the govt will listen? lol

Anonymous said...

For more detailed discussions on these important topics, see:
Singapore Kopitiam
http://forums.delphiforums.com/sunkopitiam/messages/

Anonymous said...

Should there be any major power failure or disaster, just imagine how many people would be suffocated to death inside the train, worse still inside the tunnel way...... but who cares, profit should comes first. . . .

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