Public Transport Fares Hike 7%, SBS to benefit?
The Public Transport Council (PTC) has announced that bus and train fares will increase by 7% from December 23rd, 2023. This is lower than the 12% increase that would have been applied under the revised fare formula introduced in April 2023. The maximum permissible fare adjustment for the current review is 22.6%, which takes into account the 10.6% increase that was deferred from the 2022 fare review exercise. The increase is mainly due to rising energy costs, core inflation, and wage growth.
SBS and SMRT are expected to see their annual revenue increase by S$20.9 million and S$42.4 million respectively. The Public Transport Council has required that SBS and SMRT contribute 15% and 30% of their increased revenue to the Public Transport Fund. The Public Transport Fund is used to subsidize fares for everyone, but it is especially important for students, seniors, and people with disabilities, who often have lower incomes and rely more on public transport.
Adult card fares will increase by 10 cents for journeys up to 4.2 kilometers and 11 cents for longer journeys. However, there will be a 10% reduction in the cost of hybrid monthly concession passes, and a new monthly workfare transport concession pass will be introduced priced at S$96 for lower-wage workers. Additionally, households with lower incomes will receive S$50 worth of public transport vouchers.
SBS’s train to be profitable again?
The recent fare increase is expected to make SBS train services profitable again, especially since ridership has returned to pre-COVID levels. In the 2022 fiscal year, SBS's train division lost money because the 2.2% fare increase in December 2021 was not enough to cover the sharp rise in energy and labour costs. With the larger fare increase now in place, and with ridership expected to continue to grow, the train division is likely to become profitable in the 2024 fiscal year.
SBS Transit's train ridership in August 2023 is back to pre-COVID levels despite the work-from-home trend, and the government expects the Singapore economy to do better in 2024. In 2023, the government kept the fare increase low to help people cope with high inflation and a slow economy. However, the government is allowing fares to increase by 7% in 2024, which suggests that it expects inflation to come down and the economy to improve.
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