REVIEW OF BUS FARES

Mr S. Vasoo asked the Minister for Communications and Information if there are plans to review the bus-fare structure, in view of the pending reduction of operational cost of the Singapore Bus Service.

Dr Yeo Ning Hong: Bus fares are determined by bus companies. Government's role is to encourage bus companies to operate efficiently and productively and to ensure that fares are reasonable in the light of operational costs.

Recent increases in productivity has enabled bus fares to be maintained at the same level since January 1982.

Anticipated decreases in employers' CPF contribution and fuel costs will help the profitability of bus companies in the short term. If these reductions are of a permanent nature and are of a level that would permit a reduction in fares, then bus companies should consider a fare reduction at the appropriate time. However, at the moment, these reductions do not appear to be long term.

Bus fares cannot be changed frequently because they require a long time for adjustments to be made. Otherwise, passengers and drivers alike will be confused about the correct fares. Therefore, bus fares should be changed only when changes in operating costs are reasonably permanent.

To be practical, the change to any fare must be in steps of 5 cts or 10 cts per passenger trip. With more than 700 million passenger trips a year, even a reduction of 5 cts per trip requires long term profitability of bus companies to be in excess of $35 million per annum before this reduction can be absorbed. These conditions are not present at the moment.

What bus companies should do is to plough back the extra profit and use it wisely to further improve their services and productivity, and hence ensure that the present fares can be kept at this level for as long as possible, even after operating costs go up again when the economy recovers.