PRIVATE BUS OPERATORS (Operation of feeder bus service)

The following Question stood in the name of Mr Chng Hee Kok -

Mr Chng Hee Kok: To ask the Minister for Communications and Information Technology what is the rationale for not allowing private bus operators to operate a lower-cost service to supplement the feeder bus service at peak hours.

Mr Sin Boon Ann (Tampines): Question No. 15, Sir.

Mr Goh Choon Kang asked the Minister for Communications and Information Technology if his Ministry will consider allowing private bus operators to operate feeder services in housing estates.

Mr Low Thia Khiang asked the Minister for Communications and Information Technology what is the objection to allowing private bus operators to operate a lower-cost service to supplement the feeder bus service and whether there is a need to introduce more competition in public bus services.

Mr Chiam See Tong asked the Minister for Communications and Information Technology whether he will allow private bus companies to operate more feeder bus service routes in competition with existing bus companies.

Dr S. Vasoo asked the Minister for Communications and Information Technology what measures will be taken to ease commuter overcrowding in buses during peak hours.

The Minister for Communications and Information Technology (Mr Yeo Cheow Tong): Mr Deputy Speaker, Sir, with your permission, may I answer Question Nos. 15 to 19 together, as they are related?

Mr Deputy Speaker: Yes.

Mr Yeo Cheow Tong: Sir, the five Members have asked about allowing more competition in the provision of public bus services, and allowing private bus operators to supplement feeder services in housing estates. Let me first explain the philosophy and principles underlying the current competitive framework for the provision of basic public bus services, so that we can better appreciate the issues involved.

Today, we have two basic public bus operators, each serving different territories on the island. In return for this privilege of being the sole operators in their respective territories, the Public Transport Council (PTC) imposes on them the Universal Service Obligation, or USO.

Under the USO, each public bus operator has to provide a comprehensive bus service in the territories allocated to it, regardless of the profitability of the route. Apart from comprehensive coverage to ensure that all commuters within its territory are served, it has to run services throughout the day at specific frequencies, even when the demand is low, in order to maintain a reasonable level of service throughout the day. In effect, the high demand periods make up for the low demand periods on the same route, eg, during late at night. This industry framework, which relies on extensive cross subsidy across routes as well as time of the day, ensures that all commuters have access to convenient and quality bus services throughout the day, and at a uniform set of affordable fares.

Mr Goh Choon Kang, Mr Chiam See Tong, Mr Chng Hee Kok and Mr Low Thia Khiang have asked about allowing private bus operators to operate a lower-cost service to supplement the feeder bus service at peak hours, and about opening up the bus market to more competition. Such a move would entail several crucial implications.

Allowing private bus operators to selectively choose the most profitable times and routes for their services, in other words, to cherry-pick, will adversely affect the ability of the existing operators to continue to provide services to low demand areas or during low demand periods. The Government has therefore been careful not to allow cherry-picking, as private operators do not need to bear the responsibility of running regular whole-day services throughout an area - whether profitable or otherwise.

What about allowing free competition in the provision of basic feeder bus services in a selected HDB estate? Free competition implies that the new feeder operator will be free to compete on fares, and on the level of service. Such an arrangement will also have to be extended to the existing feeder bus operator. One outcome could be that the bus operators will compete aggressively along the corridors with heavy demand in the designated estate, and during the peak hours when passengers are plentiful. However, residents in the outlying parts of the designated estate may end up with less frequent services, since the operators will have less ability to cross-subsidise them. Off peak hour services may also end up being unacceptably infrequent.

However, we are keeping an open mind on the issue of enhancing competition. My Ministry and PTC will study under what circumstances and conditions we can allow private operators to operate feeder services. As this is a complex issue, PTC will need some time to fully examine the options and their implications.

Dr Vasoo asked about the measures that will be taken to ease overcrowding during peak hours. First, let me give Members a brief overview of the service quality of the two public bus operators. A recent audit commissioned by the PTC showed that SBS and TIBS comply with most of the standards set out in the Basic Bus Service Specifications and Standards. The survey showed that overall, there is a high level of bus service, especially in terms of service coverage, availability and frequency. This was also borne out in a recent independent survey carried out by Zaobao. The survey showed that 9 in 10 persons polled said that the public transport here is efficient and reliable, and two-thirds said that the public transport in Singapore is world-class. This is no small achievement. Many Singaporeans who have used the public transport system in other countries do realise that we have an affordable, good quality public transport system here.

Nonetheless, while overall service quality is good, there is room for improvement during the peak within peak period. While commuters accept that buses will be crowded, and even packed, during this period, they expect to be able to board their buses without having to wait too long.

The bus companies have assured PTC that they have, in fact, been putting in more bus capacity to address this challenge. In the last three years, SBS has increased its capacity by 5% although ridership has dropped by 3%. TIBS has expanded its fleet by 213 buses. In effect, it has increased its bus capacity by 58%, even though ridership has only increased by 36%. Both companies have also injected more buses into congested routes through better vehicle management, and have increased the number of mid-trip buses, to provide downstream commuters with empty buses.

Sir, I can assure Dr Vasoo that PTC will continue to closely monitor the situation. Where the overcrowding is especially problematic on a particular service during the peak within peak period, the bus operator will be required to put in more buses to expand capacity to meet demand. PTC is now discussing with the bus companies on expanding their bus fleet with more double decker or Bendy buses.

At the same time, if there is evidence to suggest that the public bus operators are not able to take any action to ease the overcrowding situation, PTC will consider opening these routes to private bus operators. The last time this happened was in 1998 when selected bus routes were offered to private bus operators during the peak within peak period to help meet the high demand. However, the private bus operators that took part in providing the supplementary services withdrew them only after less than 12 months. In summary, the current bus framework provides bus commuters with good quality, affordable bus services at all times of the day. Bus commuters do get good value for their money.

However, there is still room for improvement, especially in certain services during the peak within peak period. This will be a continuing challenge for the bus companies, as new housing estates are developed and existing ones expanded, resulting in changes in demand. I have asked the PTC to closely monitor the performance of the bus companies, and to work with them to ensure that they are indeed meeting the quality of service standards set by the PTC.

Mr Low Thia Khiang: Sir, does the Government consider SBS and TIBS as private commercial companies, or are they required to provide a public service?

(2) Why is the Government asking the bus companies to provide cross subsidies in order to achieve the so-called USO and seamless transportation system? Is the Government trying to have the cake and eat it?

(3) Will the Government consider providing grants to companies to run unprofitable bus routes, and that opens up the market for competition for other operators to come in?

Mr Yeo Cheow Tong: Sir, the two bus companies are indeed private bus companies. As to why they are required to perform the USO, this is a fairly standard procedure in the management of public bus services. In any country, or in any city, it is not possible for all routes to be equally served unless they are priced properly.

There are two ways of pricing them properly. One is to allow free market to rein, which means that in the areas with low ridership or low demand, the operators will then provide a service that is fairly infrequent or they should be pricing the service in order to recover cost, which means for the outlying areas, people have to pay a lot more for the bus services. The other way is to allow cross subsidy, ie, during the period when the demand is very high, the bus company is able to make money and that will then cover the higher cost during the low demand period, and which is why the USO is in fact a device to safeguard the interest of commuters wherever they are living. This way, they have access to a fairly uniform quality of service.

In terms of grants to run unprofitable routes, it is best for the Government not to be involved in providing grants to actually cover the operating cost of those routes. It is better that the services be operated commercially and that the operators recover the operating cost from the commuters directly, rather than through a grant from the Government. 2.00 pm

Mr Deputy Speaker: Order. It is 2.00 pm. End of Question time.

[Pursuant to Standing Order No. 21(3), Written Answers to Question Nos. 21-22, 24-28 and 30 on the Order Paper are reproduced in the section, "Oral Answers to Questions Not Reached" (Cols. 1803-10). Question Nos. 20, 23 and 29 have been postponed to the sitting of Parliament on 25th July 2001.]