New bus contracting model a "more sustainable option": SBS Transit

[Aris]

New bus contracting model a "more sustainable option": SBS Transit

By Kevin Lim
POSTED: 21 May 2014 18:49

SINGAPORE: SBS Transit, Singapore's main public bus operator, said on Wednesday it welcomed the Government's new contracting model for bus operators, describing it as "a more sustainable option for the future".

"It will have a major impact on the way we operate. We are, however, prepared for this upcoming challenge and will be able to tap on the experience of our sister companies in London and Sydney, which operate in a similar tender regime," SBS Transit said in a statement.

SBS Transit's parent ComfortDelgro operates bus services in Australia, China, Ireland and the UK, where subsidiary Metroline is one of London's largest public bus operators with a fleet of over 1,700 buses.

Its remarks come after authorities announced plans to restructure the public bus industry by adopting a "government contracting model", starting from the second half of this year.

Under the new system, the Land Transport Authority (LTA) will determine the bus services to be provided and the service standards, and bus operators will bid for the right to operate these services.

The bus operators will be paid fees to operate the services, while fare revenue will be retained by the Government.

SBS Transit operates about 250 bus services with a fleet of more than 3,200 buses.

It also operate the North East and Downtown MRT lines, as well as the Light Rail System in Punggol and Sengkang new towns.

For the three months ended March, SBS Transit's bus operations suffered an operating loss of S$4.7 million, down from a loss of S$5.4 million in the first quarter of 2013.

- CNA/do

A sure win win situation, they win all the time and we, the commuters lose out. When they make profits they keep and those areas where they lose money, the government will cover to ensure profitability.

[richardg]

SINGAPORE: The local bus industry will undergo an overhaul after the Government announced on Wednesday (May 21) it will go with a “government contracting model” starting from the second half of this year. Actual implementation will only take place in 2016.

The Land Transport Authority (LTA) said in a statement that the existing Bus Service Operating Licences (BSOL) for the two public bus operators – SMRT Buses and SBS Transit – will expire on Aug 31, 2016.

How the agency intends to restructure the industry:

Bus operators will bid for the right to operate the services, based on the routes and service standards laid out by the LTA, which will pay the operators. Fare revenue will be retained by the Government, it added.

All bus infrastructure such as bus depots, as well as operating assets such as buses and existing fleet management system will be owned by the Government, too. This will lower the entry barriers and attract more bus operators, and ensure the transition from incumbent to any new operator will be smooth, the LTA said.

“Besides strengthening the Government’s ability to respond more expeditiously to changes in travel demand and service level expectations, bus contracting will also promote greater competition and efficiency among operators as they now have to compete for the right to run the services," the LTA said.

"This in turn will lead over time to provision of better bus services in a cost-competitive manner, thereby benefitting commuters."

Commuters can expect to experience shorter intervals between buses during peak periods in the morning and evening once the government contracting model is in operation. The LTA said it expects the interval to be no more than 15 minutes for 100 per cent of all bus services during these periods, with intervals of no more than 10 minutes for half the routes.

By comparison, bus operators are expected to ensure bus intervals are no more than 20 minutes during peak periods under the existing Bus Service Enhancement Programme introduced in 2012.

Gradual changes to come

LTA has been experimenting with the government contracting model since last year via the City Direct Services and Peak Period Short Services. The agency said that competitive tendering for public bus services will be introduced in phases over several years to ensure a smooth transition for all in the industry.

The transport authority will bundle all bus services in Singapore into 12 packages, each comprising 300 to 500 buses. As a start, LTA will tender out three such packages, with the first tender scheduled to be in the second half of the year. Bid winners will start operating bus services from the second half of 2016, with the three packages constituting about 20 per cent of existing buses.

The contracts are for five years, with an additional extension of two years available pending good performance, the agency said.

Incumbents SMRT Buses and SBS Transit will continue to operate the remaining nine packages, but the LTA will negotiate with both parties to offer their services for another five years based on the contracting model once the BSOL expires. Once the new five-year deals expire in 2021, more of the bus packages will gradually be opened up to other operators, it said.

- CNA/do

[dzylim]

but retail business they will still be holding on right? means we have to pay the government more run the loses but they keep the profit making ones.

[dzylim]

so the one with the lowest bid will win? then service screwup we cannot complain?

[hkh]

Originally Posted by dzylim

but retail business they will still be holding on right? means we have to pay the government more run the loses but they keep the profit making ones.

Yalor......and actually garment almost run everything except they have no drivers.......

[Kohaku]

I wonder who is the smart person who come up with this idea. LTA or bus operator?

Later who win win?

[Aris]

This thread is political?

Bus contracting model good news for SMRT, SBS Transit: analysts


By Linette Lim
POSTED: 21 May 2014 22:17


Analysts say the new bus contracting model -- under which the Government will own all bus assets -- is good news for the two incumbent public transport operators SMRT and SBS Transit.

SINGAPORE: Analysts say the new bus contracting model -- under which the Government will own all bus assets -- is good news for the two incumbent public transport operators SMRT and SBS Transit.

With repair and maintenance costs making up a fifth of the operating costs, analysts say the new model will lift a load off the firms, enabling them to provide better service.

SBS Transit said the new model will have a major impact on the way it operates.

But it is optimistic that it can draw on its experience of running buses in London and Sydney under a similar tender regime.

SBS Transit CEO Gan Juay Kiat said: "This is one of the most significant developments in the local bus industry in recent times. We look forward to working closely with the authorities as we transition into the new operating environment."

Competition is expected to increase, but with the incumbents still guaranteed 80 per cent of the market share until 2022, analysts said it is good news for now.

Edison Chen, investment analyst at DMG & Partners Research, said: "Going forward, even if they lose this 20 per cent, in the early tender (that will be implemented) in 2016, they still have 80 per cent market share which guarantees that they will be able to negotiate at a price that will be able to at least make them money.

“So I definitely am positive about this news flow, and I believe that the market should react positively."

The other half of the public bus duopoly, SMRT, said that it is geared up to participate in the competitive tendering exercise.

SMRT in a statement said: "Regardless of the outcome for SMRT however, there will be transition issues that will need to be worked out through the Public Transport Tripartite Committee so that the interests of affected staff will be looked after.

“We will continue to place the highest priority on service excellence and operational performance in our existing bus operations."

Foreign players that could enter the fray are likely to be multinationals which have experience with bus contracting models.

Those foreign players include French firms Veolia and Keolis, British company Go Ahead, and Australia’s Tower Transit.

The share prices of the two incumbent transport firms have rallied in recent weeks amid market talk of possible changes that will improve their bottomlines.

SBS Transit’s shares are up 8.4 per cent, while SMRT’s shares are up 24 per cent year-to-date.

Gabriel Yap, executive chairman of GCP Global, said: "If you look at the current models, the profit deterioration in both companies has been very significant.

“For example, SBS Transit -- three years ago they were generating S$54 million in profits, and now profit has plunged to S$11 million as of last year. More importantly, this current model -- based on 2 per cent operating margins -- is definitely not sustainable."

According to the Land Transport Authority, contracts will not be won by the lowest bidder. Instead, transport companies will be evaluated on factors such as service levels and its track record.

Under the bus contracting model, analysts say companies can expect to earn an operating margin of around 8 to 10 per cent.

- CNA/nd

http://www.channelnewsasia.com/news/...l/1115658.html

Huat ah! Both companies can celebrate.

[konekcewa]

Originally Posted by Kohaku

I wonder who is the smart person who come up with this idea. LTA or bus operator?

Later who win win?

Actually worker party proposed this before before the election, But the garment said its expensive.
But now they used it...never paiseh..one..knn

[Aris]

Competitive tendering....who in Singapore has the means and the expertise to run bus operations? No horse run.

[KAO LUO]

price going up again bo ?? ,.,.,.,.,.,.,.,.,.,.,.