Wednesday, May 09, 2007
Crutch Mentality Of Public Transport
Latest: One supporter has made a podcast out of this article. All thanks to him/her! ;)
PAP government has taken every fine measures to prevent "crutch mentality" from developing among our citizens. Any tiny suggestion of "welfarism" is considered as a big taboo.
However, we have been witnessing public transport companies raising fares every now and then and this is done with the blessings of the government. Ever since public transport companies are being "privatized", the reasoning is always the same; these companies must make money. It seems to me that only transport companies are "blessed" in such a way that a profit will be guaranteed no matter what. Of course, the easiest way for a public transport company to make money is to raise fares. If cost went up, raise fare to cover the short fall. Never mind if the companies themselves lack efficiency or lack creativity in making money from other means.
I have put up an article on fare hike before and here again, I am going to show why we should not let transport companies to persistently ask for fare increases.
The two most important aspects of a public transport companies are:
1) Serving the masses
2) Provide convenience
These are the responsibilities as well as the means that the companies could make money from. However, if a public transport company only think of making money out of charging fare alone, then it will fail miserably. It should learn about what "cross subsidies" can do to boost bottom line.
If a public transport company only thinks about making money out of charging fare, then it will inevitably end up in a vicious cycle of losing commuters and thus ridership, forced to increase fare. There is nothing mysterious about this. One way to make more profit is to squeeze cost. This means that to increase the number of trips a commuter needs to take, reduce competition, reduce frequency of services, increase fare....etc.
This is partly why we end up with an interesting situation here whereby the cost of car is so expensive but yet, Singaporeans are still prefer to have a car of their own. This is basically because public transport has become so inconvenience and unbearable.
I have learnt from the HK public transport model that the main profit is generated from sources other than the fare itself. Due to the competitive environment, bus companies in HK have to provide efficient system of bus services. This would mean an increase in costing but they could cross subsidize it by having more advertising income. If you look at our buses on the road or the trains, you will realize that advertising space is not fully utilized.
If you walk into the HK's MTR station, you will realize that every space possible for advertisement will not be left empty. Every space available for shops that provide convenience is not spared. The trains will have digital board running with news updates and advertisement. Every MTR stations or bus terminals are linked closely with some residential flats. The newer MTR stations are built together with shopping malls as well as residential flats on top or just linked next door. Some projects are done by the train company in cooperation with other property developers. It means that train stations are integrated with residential projects to provide maximum convenience. In return, the train company earn a cut from development as well as property maintenance. By doing so, it will retain higher ridership and in the end, higher profits from advertisement.
Have you seen any MRT station in Singapore which is integrated with residential projects? Could you find a shopping mall with residential flats on top standing next right to a MRT station? There are residential flats with as many as 20 flats of 30 storey high sitting next to a MTR station in HK! This is one of the fundamental reason why Hong Kongers prefer to take public transport instead of driving their own cars. And by doing so, the train company get to hold on to a strong demand of commuters by virtue of convenience. On the other hand, by virtue of the massive commuters it has, it could command a good return from advertising because its effective and efficient in reaching out to consumers.
If we look at the design of our town planning, it seems that most people need to take feeder bus service before they could reach a train station or the bus terminal. It not only inconvenience commuters but also added cost to them. In the long run, with such time consuming, costly as well as inconvenient system, people who could afford a car will give up on public transport.
In Singapore, it is a total dismay in such strategic thinking. When the development of Ang Mo Kio Hub was given to Singapore Labour Foundation, it was first planned to have residential cum office on top. However, for some reasons, the idea was scrapped. Now, if the project is given to either MRT or SBS Transit, the outcome would be very different. These transport companies could earn rents from the shopping mall as well as the offices, at the same time, earn from the sales of those residential flats on top. Why not? But no. No shopping mall projects or condominium projects near any MRT stations or bus terminals were given to the transport companies! Why is the case?
If the transport companies were given priority in developing the shopping malls and condominium or residential projects surrounding it, it could better incorporate linkages to these projects. Furthermore, it would rationalize according to its priorities and business model. Alternatively, city planning in Singapore towns must be revamped. It means that land near the transportation nodal points must be marked out as residential cum shopping malls. The overall strategic thinking of both the transport providers and city planners must change in Singapore.
I would say that local public transport companies should be more aggressive and creative in making money instead of waiting for the approval of fare hikes. Instead of strengthening their means to create value, they have been diminishing their value in the name of "cost cutting". Frequency of their services have been lowered. In the long run, ridership will fall. If we aim to accommodate 6.5 million people, how can this go on like this?
The demand of regular fare hike is a crutch mentality in the making. There are really many other ways that public transport companies in Singapore could make profits, not just from fare but from their strength in convenience and the masses they command. If we continue to allow other GLCs or SLF to develop prime areas in towns instead of the transport companies, how could there possibly be full utilization of resources and cross subsidies to public transportation companies?
In comparison, our public transport companies have not fully capitalize on advertising revenue as compared to their Hong Kong counterparts. Instead they have put more time in thinking of ways to maximize profits by means of creating more demand on services via re-routing and feeder bus services. However, this inconvenience commuters and will result in loss of ridership in the long run.
While our government always self proclaim to be "World Class" that command "World Top Salaries", I think they should do better than increasing public transport fare hikes every now and then. It is time to evaluate efficiencies of public transport companies in terms of generating other revenues rather than over depending on revenues from fares alone. Most importantly, stop the crutch mentality of public transport companies depending on increasing fare hikes to increase profits. Please think out of the box!
Goh Meng Seng