Yawning Bread. August 2007

Public transport model needs a rethink


    

 

 

The Public Transport Council will tighten its rules on bus operators, requiring them to run most bus services at 10-minute intervals (or shorter) during peak hours, instead of 15-minutes, as currently allowed for.

Most people will think this is good news. The provocative side of me thinks a case can be made for seeing this move as misguided.

Indeed, there is a problem of insufficient capacity and long waiting times during peak hours, but is it the best solution to look only to the two present operators to fill the gap? If we look at the macro picture and ask ourselves what sort of public transport model we should have, other alternative solutions appear. In demanding that the two existing operators abide by the new rule or else be fined, we seem to be fixated on the present model, tinkering with it to fix commuter complaints. But what about adopting a different model altogether?

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First however, let me fill you in on the announcement by the Public Transport Council (PTC). They announced on 1 August 2007 that bus operators must "run at least 80% of their bus services at headways or frequencies of not more than 10 minutes, instead of the present 15 minutes, during weekday peak hours."

This means that during those periods, the schedule must indicate a bus leaving every ten minutes (or less) for 4 out of 5 services, from the termini.

Under the present provisional quality standards, the bus operators need only send a bus out every 15 minutes, during peak hours. Gerald Ee, the PTC chairman, said, "The PTC decided that the current service provision standard of 15 minutes for peak period can be reduced further. This is long when we factor in the 5 minute allowance for operational deviation in the actual schedule. On the ground, this could translate to waiting times of 20 minutes or more for some commuters."

However, "this change will be phased in over two years," said the PTC, to give time to the bus companies to acquire the additional buses and staff needed.

Gan Juay Kiat, the Chief Operating Officer of SBS Transit (one of the two public bus companies in Singapore) told the Straits Times they would add about 100 buses to its fleet of 2,700 to meet the new waiting-time standard. Therein lies the rub: costs will go up.

The following day, it was revealed that SBS and SMRT, the two operators of the public bus and train systems, were seeking a fare increase from the PTC. There's apparently a formula for annual adjustments, pegged to the overall health of the economy, whereas in the past, the companies had to justify their increases by showing the PTC their operational costs. Even so, it is, in theory, not automatic. The PTC's approval still has to be obtained, but there is not a lot of public confidence that the PTC would do anything but approve.

No one appears to interrogate the idea that prices ought to rise in line with general inflation or economic growth. Why should that be so? There are plenty of examples of products and services falling in price over long periods of time. The cost of telephony and computing is one example. Even the plate of chicken rice from a hawker stall in my neighbourhood market has remained at $2 for at least 10 years.

The lazy a priori assumption that costs must necessarily rise and that bus companies must necessarily make a profit effectively binds the PTC to approving the fare increase year after year.

Both SBS Transit and SMRT make millions in profits, while for many Singaporeans, wages have been stagnant and the recent increase in the Goods and Services Tax from 5% to 7% have already eaten into their disposable income. Why do these two companies get iron rice bowls?

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The simple recounting of the bare facts above has sketched the knotty problem of public transport in Singapore. Basically, it has all the ills of central planning.

To be fair, our system is actually quite admirable. Not that I've been all over the world, but I haven't yet seen another major city with a system that is quantum leaps better than what we have. Nonetheless, that our system leaves people frustrated cannot be denied. Telling them that no city has found the perfect answer is not much comfort.

Far from it that I should pretend to have a solution. All I can do here is to share some thoughts I've had about the state of things.

 
Low density of rail coverage

The root of the problem is that Singaporeans have first-world expectations of public transport without a European or Japanese rail network. Large areas of our city are not anywhere near a metro station -- for example, the River Valley district, Marine Parade/East Coast Road, Clementi West, the Bukit Timah–Bukit Panjang corridor.

The result is that the system must necessarily depend on many transfers between trains and buses, which are time-consuming. Where in many cities people can walk to the nearest station, such a luxury is rare in Singapore.

We should aim to have 75% of apartments within 400 metres of a station. I don't know what the percentage is currently, but my guess is that it is not more than 10%. Yet we are reluctant to invest aggressively in the rail network. The unspoken requirement that any new line must be profitable from nearly the first day of operation is debilitating.

I would say that this is the Gordian knot that must be cut. So long as the rail density is low, no amount of tinkering with buses will truly satisfy commuters.

 
Segmented services

There seems to be a common perception that public transport is for "low-income" people. I saw this again yesterday in a comment on someone's blog. This is too simplistic. Knowing who your customers are is essential to designing a good product and providing a good service, and relying on such misconceptions can be self-defeating.

Raymond Lim, the Transport Minister, recently said the target in Singapore should be 70% of trips made on public transport (it is currently only 50%). This means public transport has to be able to serve and satisfy a rather large spread of socio-economic segments, with quite different abilities to absorb costs.

Some commuters will be price-sensitive, but others will fret more about waiting times and journey comfort.

The idea of premium bus services has been around for some time, but it doesn't seem to be actively pushed. It appears mostly in the form of "express" services, which people tend to confuse with ordinary services, because the buses look similar. Unknowing commuters then board the bus, find they have to pay more, and worse, that the bus skips the stop where they want to get off!

The neglect of segmented products and services is characteristic of central planning, which has a tendency to think in terms of "one size fits all".

It should be obvious to any marketing person that premium services needs a distinct brand, and should be managed by an autonomous business unit. Better still if it is tendered out to companies unrelated to SBS Transit and SMRT, so that the idea gets the attention it deserves. Only then will a route network be seriously developed to cater to time-pressed people who can afford to pay more.

 
The imaginary peak hour

You will have noticed that the latest announcement of 10-minute intervals was only for peak hours. I searched the web but couldn't find any definition of "peak hours".  I suspect they're still thinking along the lines of 5 - 7 pm. Like bureaucrats everywhere, they probably think the private sector too go home at 5 pm on the dot.

It doesn't take many observations to notice that our buses and trains are packed even well past 9 pm. Sometimes, the 11pm trains are so full, you can't even board. Yet, service frequency is quite low at these times, since they are probably considered "off-peak".

Again, this kind of failing is characteristic of central planning.

In any competitive market, new entrants would have long ago entered the fray, laid on extra services to cater to demand. Our problem is that there is no competition. The PTC themselves have set such stringent standards that no third company is likely to enter the market.

There needs to be a complete rethink about the need for competition, since regulated monopolies are always blunt instruments. By the fact that the PTC had to change the rules, complete with fines, you can see that the incumbent operators were not interested in responding to demand. Only nifty enterprises, driven by market forces, can provide the quick and subtle responses to shifting demand and rising aspirations.

On the other hand, there is a valid concern that in a privatised market, districts with low residential density will be ignored completely. This suggests a hybrid, or two-tier solution. There should be licences for comprehensive bus services, and for independent services.

"Comprehensive" would mean 

  • Wide route coverage 
  • Wide time coverage 
  • Minimum frequencies 
  • Regulated fares 
  • Tax incentives or subsidies (as quid pro quo for regulation and running low-revenue routes)

"Independent" would mean 

  • They can choose what routes they wish to run 
  • They can choose what times and frequencies to run 
  • They are free to set their fares 
  • No tax incentives or subsidies.

To keep fares low for the comprehensive services, the regulator should not demand that they increase frequencies all that much during peak hours. To insist that they have all these extra buses running during those times, but lying idle during off-peak, is to impose costs on them, which must eventually be reflected in the fares.

The surge demand during peak hours is better catered to by independent operators. They should be nimble enough to design routes to cater to the surges and be free to charge accordingly. This does not mean they can price-gouge, for the independent operators would be competing among themselves, while the comprehensive operator would be setting a price floor.

 
These are some of the basic concepts I feel we need to take seriously if we are ever to improve our public transport system substantially. There is currently a hush-hush major review going on, but from what I have read, much focus is being put on whether public transport should be amalgamated into a single company, or whether the duopoly should be left as it is. Both, in my view, are the wrong solutions. Worse, they are really answers to the wrong question: What sort of corporate and management structure?

The questions should be: What products and services are needed to satisfy the customer? What other players can we invite into the market to help us serve them?

© Yawning Bread 


 

Fines

The other "tightening" that the PTC announced was that from October this year, if any bus company fails to meet any of council's 19 quality parameters, it will be fined. I thought it was interesting that they've never had teeth to enforce standards before.

 

Footnotes

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Addenda

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