Govt to own all buses, plan routes in move aimed at improving services
The Straits Times – May 22, 2014
By: Christopher Tan Senior Transport Correspondent
IN THE most sweeping shake-up of bus services here in years, the Government plans to overhaul the public bus system from the second half of 2016, which will see it owning all buses and deciding on bus routes.
These routes will be tendered out to both local and foreign operators to run, and fares collected will go to the Government.
The move will dismantle the current duopoly enjoyed by SBS Transit and SMRT, and aim to significantly raise service standards while ensuring the long-term viability of operators.
The Land Transport Authority (LTA), which announced the change yesterday, said operators under the current model are reluctant to run routes which are unprofitable. But in the new system, operators will not have to worry about how much fare is collected.
The bus fares will instead go to the LTA, which will use them to pay the operators.
The revenue, however, is likely to fall short, which means that the Government will have to increase the amount of subsidies it currently puts into public bus services.
Commenting on the move in a Facebook post yesterday, Transport Minister Lui Tuck Yew said: “I believe this new model will enable us to respond more speedily to changes in ridership patterns and commuter needs and provide a better service to commuters.”
As contracts under the current system run out at the end of August 2016, bus routes across the island will be bundled into 12 parcels, which will go up for bidding.
The first three parcels will be awarded by 2016, and the remaining nine by around 2022.
Winning operators will be paid a sum to run the routes, plus incentive bonuses if they meet or exceed service standards.
These standards will be significantly higher than those in place today. For instance, during peak periods, all buses will have to arrive at intervals of no more than 15 minutes, down from the current 30 minutes.
Government Parliamentary Committee for Transport chair Cedric Foo said that, with the new model, “fares will now rest squarely on Government“. And there will be political and public pressures to keep fares low, he added.
“But the good thing is there’ll be transparency,” said Mr Foo, explaining that the real cost of running a comprehensive bus network will be known, as will the amount of subsidies.
The LTA, which has been studying similar models in Australia and London, said details of the first route parcel will be announced next week.
Each contract will span five years, with an extension of two years for good performance.
In all, the LTA expects the market to accommodate three to five players eventually.
Mr Foo said a strong incentive-and-penalty scheme, plus the relatively short contracts, will keep operators on their toes. Under the current system, in which contracts span 10 years, “there is no pressure to perform”, he said.
Regular bus commuter Tan Pang Soon, 25, said he expects service to get better, as operators “no longer face revenue risk”.
Dr Paul Barter, an adjunct professor at the Lee Kuan Yew School of Public Policy, said: “If done well, it should offer the best of both worlds – strong capacity to plan an ambitious bus system that is needed, and benefits of competition via a tendering process.”
Like other transport experts, Dr Barter believes that, for public transport to work well, government needs to have a strong involvement. And this new model allows for that, he noted.
Mr Foo added: “It won’t be perfect but it’d be better than the status quo, and better than nationalisation.”
Lui Tuck Yew
Why bus contracting?
We first mooted the idea of contracting for bus services in the Land Transport Master Plan in 2008.
Since then, LTA has been studying this carefully, visiting cities with bus contracting models such as London and Australia. I’d also visited London and been briefed by officials at Transport for London and Metroline, one of many bus operators in London. I could see that the commuters there enjoy enhanced bus services over time under this bus contracting model because the operators need to compete for the right to run the bus services. This has kept them on their toes.
When I took over in 2011, my immediate priority was to expand bus capacity as quickly as possible. Hence the BSEP funded by the Government, which was introduced in 2012 and subsequently expanded to 1000 buses operated by the incumbent PTOs.
We are now ready to begin the process to move beyond BSEP and restructure our public bus industry to a “Government contracting model”. I believe this new model will enable us to respond more speedily to changes in ridership patterns and commuter needs and provide a better service to commuters. Potentially, more bus operating companies, including foreign ones, can enter our market and raise the level of competition.
Any changes to a system that we’ve been running for many years means that there will be adjustments needed at various levels and possibly some transitional issues. We will pay careful attention during implementation to minimize inconvenience to commuters. To achieve a smoother transition, we will be implementing bus contracting in phases over several years. Most importantly, we will see to it that the welfare and interests of bus workers are well taken care of.
You can look forward to shorter waiting times and more reliable bus services when the Government Contracting Model is implemented!
All bus services will have scheduled headways of no more than 15 minutes during the morning and evening peak periods, with half of the bus services having shorter scheduled headways of no more than 10 minutes. Feeder services will also run at even shorter intervals of 6-8 minutes. Overall, about 45% of bus services will have shorter intervals during peak periods.
Yes, bus operators will have to meet higher service standards under the Government Contracting Model, bringing more reliable bus services, shorter waiting times and improved service levels for commuters!