Thursday, May 22, 2014

Profit Before Service

That whiff in the air, not alcohol, not riot inducing. Smells like.... like another excuse to raise the bus fares.

You get the drift when they pointedly mentioned that in the London system, which is one of two contracting models quoted, fares have gone up by 59% since 2005. In Perth, the Premier of Western Australia is cited as saying commuters may soon have to pay half the costs of running the bus and rail system, instead of the present one third. No data was provided for Japan, Korea or any other country.

According to the Land Transport Authority, operators under current privatised model may not run services if they are deemed to be unprofitable, hence the occasional shortages and tenuous waiting times. Profit before service seems to be the mantra.  It's cold comfort that these operators, namely SMRT and SBS Transit, need not bid for 80% or 9 packages of existing and new routes. They need not compete with the new entrants, which will be fighting for the 20% or 3 packages. Their negotiated contracts will ensure that the new system restructure will have little or no impact on SMRT and SBS Transit balance sheets. SMRT share price actually hit an 11-month high of $1.475 on Tuesday, affirmation that someone upstairs is still taking good care of them. Never mind that if they had done a better job, this whole exercise would not have been necessary.

Meanwhile the talking heads are having a field day debating whether the whole revamp - Government owing all bus operating assets, infrastructure, monitoring and operating systems, fare collection - is tantamount to nationalisation or semi-nationalisation. Transport Minister Lui Tuck Yew  says that nationalising public transport will lead to higher fares and a heftier burden on taxpayers. In the absence of any stated objectives to cut costs and reduce overheads, the inevitable hike is a foregone conclusion. Already they are planning to repaint all the buses, in mimic of the iconic red London bus.

11 comments:

  1. Sometime before GE2011 Lim Hwee Hua said nationalisation won't work. And Lui Tuck Yew followed up by saying WP's ideas has serious drawbacks. So now, can we finally say this is a Yew-turn from the same talking heads?

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    Replies
    1. There is no uturn. Same mantra of profit before service. Self before nation. Just look at Grace Fool and Lim Wee Kat. Greed has no bounds. Insider trading of SMRT shares must be going on all before this news.

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  2. So long as the mantra "high profits low expenses" doesn't change, regardless of the model implemented, fare increase will be an annual event, bus driver's pay will be under constant pressure to stay low and more CBF foreigner required to deliver more or less status quo services.

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  3. The macro level has changed, so as the micro level. The change in the transport policy is inevitable.

    Otherwise, someone out there would probably end up "winning the battle but lost the war".

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  4. Fare hike is inevitable. Just look at how the Message is subtlely put through the Media; something like how much are commuters (You) prepared to pay for better Public Transport Services.
    As usual and normal, there will be lots of DAFT SINKIES APPEARING IN THE MEDIA TO SAY THEY ARE MOST WILLING TO PAY. THESE DAFT SINKIES CARE NOT HOW MANY MILLIONS THE TRANSPORT OPERATORS ARE MAKING. Some of these Daft Sinkies could even be using the Public Transport Services only once a while. You may wonder why then do these once in a blue moon riders support fare hikes. The Answer is simply that they could shareholders, bootlickers or those wanting some limelights in the Media as their idea of fame and (vain)glory.

    patriot

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  5. Is that not manipulating the market ? So essentially that means public listed companies like SMRT & ComfortDelgro will always make a profit at taxpayer's expense? And profit will depend on how much transparency just like how much CPF dividends are siphoned away?

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  6. Whether the bus system is nationalized or not;
    Under a PAP government;
    The prices can only go up.

    Don't waste time debating the merits of a nationalized bus system.
    Just vote Opposition.
    It's a waste of time to engage a wayang political party in serious conversation.

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  7. So even though the ex-CEO Ms Saw has utterly failed in her role, she still remain a shareholder who held 1 million shares or so. With this share price rising and getting spun off again to the govt, she is reaping both ways. Wow, that is how Ms Jinx make money for our CPF retirees issit?

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    Replies
    1. How to lose?
      If bus operations don't make money ... just increase bus fares.

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  8. If bus operators dont have to undertake the bus purchasing cost, then shouldn't bus fare dropped ?

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  9. Why tiptoe around? If you are going to pay for the buses and high capex infrastructure, why not just nationalize the whole bus service?

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