I THANK Mr Tan Shao Yi for his letter last Thursday ("Free public transport of bottom-line mentality").
Having commercial operators provide public transport services is not in conflict with safeguarding public interests. Our approach is to ensure that public transport operators (PTOs) are motivated to operate as efficiently as possible, but within a strong regulatory framework that safeguards the interests of the commuting public.
To ensure that the pursuit of profit is not at the expense of service quality, PTOs have to meet Quality of Service standards for buses and Operating Performance Standards for trains. These standards are reviewed regularly. Basic bus operators are also subject to a Universal Service Obligation. This requires them to provide a basic service when there is a minimum level of demand, even if the route is unprofitable.
In addition, the Public Transport Council regulates public transport fares through a fare cap formula, such that the PTOs cannot raise fares and pass on their costs as they wish. This fare mechanism allows PTOs to operate like commercial enterprises and to strive for profits by being more productive and cost-effective in their operations, but at the same time, also requires the PTOs to share their productivity and efficiency gains with commuters in the form of lower fare caps.
A nationalised operator that does not operate on a commercial basis would have less incentive to keep costs down, especially if fares are allowed to be charged on a cost-plus basis. Over time, this will lead to higher costs for the same level of service. This is why many cities around the world, like Hong Kong, Sydney, Melbourne, Tokyo, Stockholm and Seoul, have commercial enterprises and not nationalised operators provide public transport services.
Helen Lim (Ms)
Deputy Director, Media Relations
Land Transport Authority