FARE REGULATION
FRAMEWORK
Public bus and train services are provided on a commercial
basis, within the maximum fares approved by PTC. The Government does not provide direct
subsidies for public transport operations.
To keep public transport fares affordable to the general
public, public transport infrastructure such as MRT/LRT lines and bus
interchanges, are funded entirely by the Government. In addition, public buses are also exempted
from COE (Certificate of Entitlement) payments.
The Government also pays for the development and software cost of the
contactless smartcard or ez-link system.
In other words, bus and train operators need only pay for their
operating and maintenance costs, and investments in service improvements.
In an environment where there is a restricted number of
service providers and an absence of real market competition, the PTC regulates
bus and train fares tightly to safeguard commuters' interest and ensure that
public transport is affordable to the public.
The PTC
is mindful of the impact of fare adjustments on commuters and tries its best to
keep fare increases to a minimum, if at all.
To achieve
this, the Council has put in place a robust framework to regulate bus and
train fares and to prevent sharp and irregular fare increases.
Annual Fare Review Process
The PTC has put
in place a framework to cap overall fare increases in small, regular steps. Since 2005, the annual fare adjustment is based on a formula recommended by Government appointed Fare Review Mechanism Committee (FRMC). The fare adjustment formula was reviewed in 2008 and the revised formula to be applied from 2008 to 2012 is as follows:
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 Maximum Fare Adjustment = 0.5 CPI + 0.5 WI - 1.5%
Where
CPI = Change in Consumer Price Index over the preceding year
WI  = Change in
Average Monthly Earnings (Annual National Average) over the
preceding year, adjusted to account for any
change
in the employer's CPF
contribution rate
1.5% = The productivity
extraction based on a sharing of productivity gains achieved by
PTOs
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The formula gives the maximum allowable fare adjustment which is the
overall quantum of change in fare revenue that is generated by the changes
in fare levels and the corresponding ridership. Fare levels vary according
to the distance-based fare structure.
Distance-Based Through Fares
Under the Land Transport Masterplan, distance-based through fares will be introduced in 2009 to make transfers more seamless in the hub-and-spoke public transport system. Under distance-based through fares, commuters will pay the same fare for a direct trip as a transfer journey of the same distance.
Fuel Equalisation
Fund
In
1992, PTC instituted a mechanism to ensure that volatile fuel prices do
not have a significant effect on public transport fares. Each operator is
required to build up its own FEF over the years, up to a target level that
is at least equal to the cost of one year's fuel consumption based on the
reference fuel prices set by PTC on a yearly basis. The balance in the FEF
of each public transport operator is shown in the chart.
As
and when the need arises, the operators may draw down their FEF to cushion
the impact of sharp transient increases in fuel prices, thereby enabling
the operators to tide over periods of higher fuel prices without
increasing fares. The operators are allowed to draw down their FEF subject
to:
Taxi Fares As of 1 September 1998, the Council deregulated taxi fares,
allowing the taxi companies to set their own fares. This provides more
flexibility for operators to respond to changes in market conditions, to
implement differential pricing to balance supply and demand at different times
of the day, and to introduce and set prices for innovative services.
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