03 August 2011

Liberalising Public Bus Services

Earlier this year, The Workers' Party proposed that the public bus system be nationalised to reduce cost and raise efficiency and effectiveness.

While the idea had its merits, I noted that there were practical difficulties [link].

The Government's response was that it would lead to inefficiencies and high cost instead.

Recently, National Solidarity Party ("NSP") proposed that the public bus system be liberalised to allow the entry of multiple private bus operators who may be smaller and more nimble.  They would respond more quickly to changes in demand; those which didn't would lose market share.

Operators would apply for licences to operate along existing routes managed by Land Transport Authority, or propose new ones.  Such routes might duplicate MRT routes to compete with, and supplement, MRT services.

The Government's response was that operators would cherry pick, going for the popular and profitable routes and shunning the unpopular and unprofitable routes, and the result would be higher fares for the latter.  The existing operators — SBS Transit and SMRT — are obliged to operate services along all designated routes.

NSP says that licence fees should be used to subsidise fares along unpopular routes.

NSP should provide quantitative proof that its model works.

If competition reduces fares along the popular routes, will the operators earn enough?  The operators have also to pay licence fees that must be large enough to subsidise the fares along the unpopular routes.  Presumably, NSP is not suggesting that the Government subsidise, even partially, the fares along the unpopular routes?

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Notes

1. Public Transport: Why the PAP and WP Positions Fall Short of Commuters’ Needs National Solidarity Party (26 Jul 2011).

2. Why “Cherry-Picking” is Good for Commuters National Solidarity Party (1 Aug 2011).

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