Getforme Singapore BUS AND TRAIN FARES TO INCREASE BY BETWEEN ONE AND THREE CENTS FrontPage Edition 12 September 2006

Wage Index (WI) : the 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; 3.5% in 2005.

1. The Public Transport Council (PTC), in deciding whether to grant a fare increase this year, would look at the fare adjustment formula (Price Index – 0.3%) which is 1.7% for 2006.

2. This fare adjustment formula protects the interests of commuters by capping the increase at a level lower than the cost increases experienced by the operators. This is done via a productivity extraction (0.3%) where operators share their productivity gains with the commuters. This is also to encourage the operators to become more efficient in their operations if they want to maintain their profitability.

PTC checks on overall economic outlook, affordability and operators’ profitability

PTC considers:

GDP growth forecast: 6.5 – 7.5% - revised upwards from 5-7% given the strong growth in the first half of 2006

Unemployment rate: 2.9% in June 2006 - lower than the unemployment rate for the past 4 years (2002: 3.6%; 2003: 4.0%; 2004: 3.4%; 2005: 3.1%)

ROTAs of operators: 6.5% (SBST) and 9.1% (SMRT) for 2005.

Public Transport Affordability Index =

Monthly Expenditure on Public Transport
Monthly Household Income

Affordability Indicator: 6.6% in 2005 - improvement from 6.8% in 2004 and 7.0% in 2003.

The impact on the Public Transport Affordability Index under the following wage growth scenarios and 1.7% increase in fares: 1% increase in wages: 6.7%

2% increase in wages: 6.6%

3% increase in wages: 6.6%

4% increase in wages: 6.5%

3. The PTC will have to take into account overall economic conditions, the affordability of public transport fares and the operators’ profitability when deciding whether or not to allow fare increases.

4. The current economic outlook is positive, with the full year GDP growth forecast for 2006 having been revised upwards to 6.5% - 7.5%. The unemployment rate has also come down to an estimated 2.9% in June 2006, the lowest in the last 4 years.

5. The PTC has assessed that there are no extenuating circumstances that require the PTC to either vary the fare adjustment quantum determined by the fare adjustment formula or to reject it.

6. Even with the fare increase granted this year, fares are likely to stay affordable with a likely increase in general wage levels. The average wage growth for 2005 was 3.5%, and 3.0% for the 1st quarter of 2006. Affordability is also maintained by the fact that child/student fares and prices of concession passes will remain unchanged.

7. The PTC also made a reality check on public transport operators’ (PTOs) ROTA (Return on Total Assets) to further ensure that commuters’ interests are protected. The ROTAs (for bus and train operations) are 6.5% for SBST and 9.1% for SMRT^[3] based on their proforma accounts^[4]. While the ROTAs can be considered to be healthy, it would be difficult to make a case that they are excessive, when compared with companies with similar industry structure and risk profiles.

ROTA of SBST and SMRT

	2003	2004	2005
SBST (Bus & Rail)	2.1%	4.6%	6.5%
SMRT (Bus & Rail)	5.1%	6.0%	9.1%

Notes:

· ROTA = Net Profit after tax/Total Assets

· These are based on proforma statements which are submitted to the PTC. They may be different from the ROTA values derived using published accounts of the holding company.

Some examples of ROTA of other companies

· Local Companies – Singapore Post (17.4%), SembCorp Industries (5.7%)

· Overseas Transport Operators – Transport International Holdings Limited (6.2%) in Hong Kong, Stagecoach Group PLC (9.0%) in the UK, FirstGroup PLC (5.6%) in Europe, Canadian National Railway Company (7.0%) in the US and Canada, Mass Transit Railway Corporation (7.4%) in Hong Kong.

Impact of fare increase on commuters

8. About a quarter of all commuters do not see fare increases. Those paying cash fares, single trip tickets on trains, children/students who pay concession fares and those with monthly concession passes (students and NS men) do not face fare increases. \

9. Of the commuters affected by fare increase, 3 in 4 of them take direct journeys on either bus or train. The Adult EZ-Link fares for such journeys will increase by at most 3 cents.

For example, an MRT journey from Ang Mo Kio to Raffles Place MRT station which currently costs $1.26 will also see a 2-cent increase from 1 October.

10. Among commuters who have to make a transfer (1 in 4 commuters), most require one transfer, say from a bus to the MRT or to another trunk bus. The majority of such journeys will see a fare increase of 3 to 4 cents.

For example, a commuter who travels via a feeder bus to Ang Mo Kio MRT station and takes the train to Tanjong Pagar MRT station currently pays $1.70^[5]. From 1 October, the commuter would see an increase of 3 cents (a 1-cent increase for feeder bus fare and a 2-cent increase for MRT).

Comparison of average bus and rail fares across cities

City	Average Bus Fare	Average Train Fare	Average Bus Fare (PPP adjusted)*	Average Train Fare (PPP adjusted)*
Singapore#	S$ 0.66	S$ 0.94	S$ 0.66	S$ 0.94
Hong Kong	S$ 1.21	S$ 1.53	S$ 1.29	S$ 1.63
London	S$ 1.40	S$ 3.75	S$ 1.03	S$ 2.76
NewYork City	S$ 1.50	S$ 2.38	S$ 1.42	S$ 2.26

Data source: Annual reports of SMRT & SBST (Singapore), MTR & SMB (Hong Kong), MTA New York City, London Travel Report, US Federal Reserve (Exchange Rate).

*Adjusted using the 2002 Purchasing Power Parity (PPP) Conversion Factor[6] published by the World Bank

# Based on 2005 (current) fares. Average fare = total fare revenue / total number of trips

Annex A

MAXIMUM BUS FARES FOR BASIC BUS SERVICES

(w.e.f. 1 October 2006)

a) Adult Fare Structure (Aircon Trunk Services)

Distance Travelled	Fare Per Ride (cent)
	Ez-link Card			Cash
	Current	Approved	Change	Current	*No Change*
4 or less fare stages	64	65	1	90
4.5 – 7 fare stages	85	87	2	110
7.5 – 10 fare stages	105	108	3	130
10.5 – 13 fare stages	115	118		140
13.5 – 18 fare stages	125	128		150
18.5 – 23 fare stages	135	138		160
23.5 – 29 fare stages	145	148		170
29.5 and more fare stages	155	158		180

Transfer Rebate	25 (No change)			NA

b) Adult Fare Structure (Non-Aircon Trunk Services)

Distance Travelled	Fare Per Ride (cent)
	Ez-link Card			Cash
	Current	Approved	Change	Current	*No Change*
4 or less fare stages	59	60	1	80
4.5 – 7 fare stages	70	72	2	90
7.5 – 10 fare stages	80	83	3	100
10.5 – 13 fare stages	90	93		110
13.5 – 18 fare stages	100	103		120
18.5 – 23 fare stages	110	113		130
23.5 – 29 fare stages	120	123		140
29.5 and more fare stages	130	133		150

Transfer Rebate	25 (No change)			NA

c) Adult Fare Structure (Residential Feeder Services)

Type of Bus	Fare Per Ride (cent)
	Ez-link Card			Cash
	Current	Approved	Change	Current	Approved	Change
Non-Aircon	59	60	1	80	*No Change*
Aircon	64	65		90

Transfer Rebate	25 (No change)			NA

d) Jurong Industrial Services Fare Structure

Distance Travelled	Fare Per Ride (cent)
	Ez-link Card			Cash
	Current	Approved	Change	Current	*No Change*
4 or less fare stages	59	60	1	80
4.5 – 7 fare stages	70	72	2	90
7.5 – 10 fare stages	80	83	3	100
10.5 – 13 fare stages	90	93		110
13.5 and more fare stages	100	103		120

Transfer Rebate	25 (No change)			NA

e) Senior Citizen Concession Fares

Type of Bus	Fare Per Ride (cent)
	Ez-link Card			Cash
	Current	Approved	Change	Current	*No Change*
Non-Aircon	59	60	1	80
Aircon	64	65		90

Transfer Rebate	25 (No change)			NA

f) Child/Student Fare Structure

Type of Bus	Fare Per Ride (cent)
	Ez-link Card		Cash
Non-Aircon	40	No change	45	*No change*
Aircon	45		55

Transfer Rebate	10 (No change)		NA

g) Monthly Concession Passes

	Type of Cardholders	Aircon
Primary Student		$22.50	*No change*
Secondary Student		$27.50
Tertiary Student		$52.00
Full-time National Serviceman		$61.00

MAXIMUM TRAIN FARES (w.e.f. 1 October 2006)

a) MRT Adult Fare Structure (North-East Line)

Distance Travelled	Fare Per Ride (cent)
	Ez-link Card			Single Trip Ticket
	Current	Approved	Change	Current	*No Change*
Up to 1.0 km	70	71	1	100
1.01 to 2.0 km	75	76		100
2.01 to 3.2 km	80	81		110
3.21 km to 4.4 km	91	93	2	130
4.41 km to 5.6 km	101	103		130
5.61 km to 6.4 km	111	113		150
6.41 km to 7.2 km	121	123		150
7.21 km to 8.0 km	131	133		150
8.01 km to 10.4 km	141	143		150
10.41 km to 12.4 km	151	153		170
12.41 km to 14.4 km	156	158		170
14.41 km to 16.5 km	162	164		170
16.51 km to 18.6 km	167	169		170
18.61 km to 20.0 km	172	175	3	190

Transfer Rebate	25 (No change)			NA

b) MRT Adult Fare Structure (North-South and East-West Lines)

Distance Travelled	Fare Per Ride (cent)
	Ez-link Card			Single Trip Ticket
	Current	Approved	Change	Current	*No Change*
Up to 3.2 km	65	66	1	90
3.21 km to 4.4 km	76	78	2	110
4.41 km to 5.6 km	86	88		110
5.61 km to 7.2 km	96	98		130
7.21 km to 8.0 km	106	108		130
8.01 km to 10.4 km	116	118		130
10.41 km to 12.41 km	126	128		150
12.41 km to 14.4 km	131	133		150
14.41 km to 16.5 km	137	139		150
16.51 km to 18.6 km	142	144		150
18.61 km to 21.1 km	147	150	3	170
21.11 km to 23.6 km	152	155		170
23.61 km to 26.0 km	157	160		170
26.01 km to 28.0 km	162	165		190
28.01 km to 30.0 km	167	170		190
Over 30.0 km	172	175		190

Transfer Rebate	25 (No change)			NA

c) LRT Adult Fare Structure (Bukit Panjang and Punggol)

Number of Stations	Fare Per Ride (cent)
	Ez-link Card			Single Trip Ticket
	Current	Approved	Change	Current	*No Change*
1 – 5	65	66	1	90
6 – 7	76	78	2	100
8 – 9	86	88		110

Transfer Rebate	25 (No change)			NA

d) LRT Adult Fare Structure (Sengkang)

Number of Stations	Fare Per Ride (cent)
	Ez-link Card			Single Trip Ticket
	Current	Approved	Change	Current	*No Change*
1 – 4	65	66	1	90
5	76	78	2	100
6 – 7	86	88		110

Transfer Rebate	25 (No change)			NA

e) Senior Citizen Concession Fares

Description	Ez-link Card Fare Per Ride (cent)
Description	Current	Approved	Change
North-South and East-West Lines	65	66	1
BPLRT, SKLRT and PGLRT	65	66
North-East Line	70	71

Transfer Rebate	25 (No change)

f) Child/Student Fare Structure

Distance Travelled	Ez-link Card Fare Per Ride (cent)
Up to 5.6 km	40	*No change*
5.61 km to 14.4 km	45
Over 14.4 km	50

Transfer Rebate	10 (No change)

g) Monthly Concession Tickets

Type of Cardholders	Current
Primary Student	$20	*No change*
Secondary Student	$25
Tertiary Student	$45
Full-time National Serviceman	$50

Public Transport Council

12 Sept 2006

[1] MTI revised the full year real GDP growth estimates upwards from 5% - 7% to 6.5% - 7.5% given the strong growth in the 1^st half of 2006, barring any economic shocks.

[2] MOM’s seasonally adjusted unemployment rates from 2002 to 2005 are: 3.6%, 4.0%, 3.4% and 3.1%. The 2.9% unemployment rate estimated for June 2006 is lower than the unemployment rate for the past 4 years.

[3] The ROTA figures are for the financial year ended in December 2005 (for SBST) or March 2006 (for SMRT).

[4] The proforma accounts reflect the bus and train operations of SBST and SMRT conducted in Singapore, which exclude exceptional items and non-transport activities.

[5] This consists 64 cents for feeder bus; $1.31 for MRT and a transfer rebate of 25 cents is deducted.

[6] The PPP is the rate of currency conversion at which a given amount of currency will purchase the same volume of goods and services in two countries. Another way of looking at the PPP is that when it is used as a currency converter, the price level is the same in both countries.

Source: www.mot.gov.sg Press Release 12 Sep 2006

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