I refer to the report “Stifling transport operators’ profits could lead to bigger fare hikes” (Feb 14).
Despite the healthy profits reported by the two main public transport companies, it was argued in Parliament that stifling the fare increase may discourage them from improving their efficiency. Meanwhile, energy costs have dropped since the middle of last year.
It was also said this profitability is largely generated from commercial operations and rental income. However, if not for their train operations, the operators would not be able to achieve the rental profit from MRT shop spaces. In economic terms, this is a positive externality derived from train operations.
Land prices around MRT stations also rise significantly. In short, MRT stations enhance the value of the surrounding land and these shop spaces.
Why should commuters be paying for almost the full cost of train operations, while the two private companies, operating as a duopoly, profit from the positive externalities?
At the same time, how can Singaporeans be sure of these transport companies’ optimum operating performance?
There is no yearly publication of comparative studies of similar operations and business environments, say, Hong Kong’s MTR operations in terms of service reliability, frequency, et cetera, against the fares charged.
Lim Kay Soon