Updated: 05/22/2014 02:44

Public bus industry to revamp business model

Public bus industry to revamp business model

The Government says it is restructuring the public bus industry from June this year. 

The Transport Ministry says the new "Government Contracting Model" will allow them to respond faster to what's happening on the ground. 

This announcement is part of the addenda to the President's address when Parliament re-opened last week. 

Under the new government contracting model, the Land Transport Authority or LTA, will determine the bus services to be provided, and set service standards. 

Bus operators will bid for the right to operate these services. 

They will be paid to operate the services. 

Meanwhile, the government will retain the fare revenue. 

The government will also own the depots, the buses and the fleet management system. 

LTA says this will lower the barriers of entry to the market and attract more bus operators. 

It also says the government contracting model will promote greater efficiency among operators as they now have to compete for the right to run the services. 

Mr Yeo Teck Guan of LTA explains why the current industry model doesn't work. 

"Well in today's industry model, bus companies have to cover their expenses and earn their returns on the revenue they generate. Hence they may not run bus services in advance of demand - such as when BTO is just completed and sufficient people has not moved in yet. And they may not be as quick to add buses to improve service levels on existing routes if the existing fare revenue they can generate is not enough."

Under the new model, the bus network in Singapore will be carved into twelve parts. 

Each will be run by an estimated three to five bus operators. 

The tendering process for three parts of the bus network will begin in the second half of this year. 

It will only be implemented two years later. 

Incumbent operators will be allowed to continue current operations until their operating licence expires on the 31st of August, 2016. 

After that, more bus services will be tendered out under the new government contracting model. 

LTA says a similar system in London and Australia has improved bus services. 

And the Government says it will continue to ensure the affordability of public transport fares under the new bus industry model. 

-By Fann Sim

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