Wednesday, 27 May 2015

[Today] Open up all bus routes to competition

The Government has introduced the bus contracting model, under which it will own and fund the bus infrastructure while contracting route services out via a competitive tender process.
It believes this will help raise service standards by increasing competition and creating more flexibility in response to changes in ridership and commuter needs.
Three packages, making up about 20 per cent of routes, will be tendered out first. The inaugural package of 26 routes went to London-based operator Tower Transit. This has been well received, generally (“Foreign bus operators will help push up standards”; May 14).
The irony is that the remaining 80 per cent will be grouped into nine packages and run by incumbents SBS Transit and SMRT on negotiated contracts under the contracting model for about five years, after their Bus Service Operating Licences expire next year.
Why the double standards? And if all remaining route parcels end up in the hands of the existing players, the exercise would be futile. If the incumbents could fulfil their roles satisfactorily, why is a new model needed?
It appears the Government wants competition but also sees the need to protect the existing operators. This will lead to the latter being complacent.
If it is believed that the competitive tender process will improve service standards, all bus routes should be opened up for tender. This would really shake up the current privatised model.
Also, all bus fares will go to the Government, which could thus make a possible profit or loss from the bus contracting. It will bear the burden of justifying any fare adjustments.
Accordingly, it should strive to maintain a break-even position as far as possible and adjust bus fares. Commuters would then benefit further from the new model.