Oral Reply by Minister for Transport S Iswaran to Parliamentary Question on Fare Adjustment Formula and Mechanism Review

Mr Zhulkarnain Abdul Rahim asked the Minister for Transport

a.      with the replacement of Network Capacity Factor to exclude ridership in the new Fare Adjustment Formula, how will fare changes take into account lower ridership or demand; and

b.     besides the Thomson-East Coast Line, whether the Capacity Adjustment Factor has considered the anticipated opening of additional stations in Downtown Line, Circle Line and Jurong Region Line from 2025 to 2028.

Reply by Minister for Transport S Iswaran:

1.     My reply will also address questions by Ms Hany Soh and Mr Shawn Huang for a subsequent sitting.

2.     The Public Transport Council (PTC) has released its recommendations on changes to the fare adjustment formula and mechanism to reduce volatility of fare adjustments, while ensuring fare affordability for commuters and the financial sustainability of the public transport system. The Government has accepted the PTC’s recommendations. The new fare formula will be applied from this year’s Fare Review Exercise, to be carried out in the later part of this year. There will be no changes in fares until then.

3.     The new fare formula replaces the Network Capacity Factor (NCF) with the Capacity Adjustment Factor (“C”). Both measure public transport capacity, which benefits commuters through improved connectivity and faster journey times. The difference is that NCF was computed every year and factors in ridership alongside capacity – it is positive when capacity grows faster than ridership, and negative when ridership grows faster than capacity. In its first three years, the NCF ranged from 1.6% to 3.9%. But the NCF was not designed for situations such as the COVID-19 pandemic, when ridership fell sharply. As a result, NCF was suspended when it spiked to 50.0% in the 2021 Fare Review Exercise.

4.     To reduce this variability, the PTC proposed “C”, which is fixed for the next five years at 1.1%. This reflects the actual and planned growth in public transport capacity from 2020 to 2026, largely arising from the opening of the Thomson-East Coast Line (TEL). Aside from TEL, “C” also takes into account short segments of the North East, Downtown and Circle Lines which will open during this period. The Jurong Region Line is slated to open from 2027 and will only be considered in the next fare formula review.

5.     The PTC opted to exclude ridership from “C” because of uncertainties in ridership recovery over the next few years, with changing commuting patterns and flexible work arrangements. While ridership at the system level is at about 90% of pre-COVID levels, the recovery has been uneven. For example, journeys to the Downtown Core are still at about 70% of pre-COVID levels. Ridership could be considered in subsequent fare formula reviews, when ridership fully recovers. In the meantime, fixing “C” at 1.1% for the next 5 years will reduce potential variability in fares arising from the uncertain recovery of ridership.

6.     Whatever the formula, the Government remains committed to keeping fares affordable. That is why, on top of fully funding public transport infrastructure, the Government subsidises public transport operations at more than $2 billion every year, or more than $1 for every public transport journey. As a result, households now spend a smaller share of their income on public transport compared to a decade ago.

7.     In addition to the broad-based subsidy that all commuters enjoy, more than 2 million commuters, or 1 in 2 Singaporeans – including students, seniors, persons with disabilities, and lower-wage workers – pay concessionary fares which are up to 70% lower than adult fares. These groups either receive their concession cards automatically or are invited to apply for them.

8.     Monthly passes can help heavy users cap their public transport expenditure. For example, seniors can purchase a monthly concession pass for $64 to enjoy unlimited journeys on bus and train services, for about $2 per day. Concession card holders can purchase a monthly pass at MRT Stations and bus interchanges, or through the SimplyGo mobile app or website if they have upgraded their cards. Singaporean and Permanent Resident adults can similarly enjoy unlimited journeys by applying for an identifiable card and purchasing a monthly pass through the same means. The PTC had suggested that more could be done to raise awareness of these passes and prompt heavy public transport users who benefit from such passes to do so. The Government will look into how to support this suggestion.

9.     Finally, when fares increase, the Government makes available Public Transport Vouchers (PTVs) to eligible households to help defray their higher public transport expenditure. Arising from the fare adjustment last year, 600,000 PTVs with a value of $30 are available for resident households with monthly household income per person of not more than $1,600. 240,000 households that received a PTV from the previous exercise and continue to meet the eligibility criteria have automatically received their PTV via post. Other eligible households can apply online or at Community Centres (CCs). Those not eligible can also appeal online or at CCs. This information is publicised via posters in buses and public transport nodes. I seek Members’ assistance to inform your residents as well, so that more can benefit.