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(22-05-2014, 10:20 AM)CityFarmer Wrote: [ -> ]

(22-05-2014, 10:13 AM)GPD Wrote: [ -> ]Supposedly GOVT needs to compensate SBS Transit/SMRT for every route they acquired into the package?

The current contract ends around 2016, so no compensation needed for early termination, base on current plan. But the GOV should acquire the assets from current PTOs, which including the buses, terminal etc.

If the lease of the assets is concurrently expired with the service contract in 2016, the govt can take over for free or nominal sum.

no one mentioned the rental and adveristing that SBS or SMRT is earning on these assets (interchanges)

Will that mean that SBS and SMRT will be expected to collect a lump sum payout for their assets as and when the govt is taking over?

Will that imply a few rounds of special capital reduction since they are going to be asset light?

How about those retail areas? Are the govt taking over them too?

(22-05-2014, 10:27 AM)opmi Wrote: [ -> ]

(22-05-2014, 10:20 AM)CityFarmer Wrote: [ -> ]

(22-05-2014, 10:13 AM)GPD Wrote: [ -> ]Supposedly GOVT needs to compensate SBS Transit/SMRT for every route they acquired into the package?

The current contract ends around 2016, so no compensation needed for early termination, base on current plan. But the GOV should acquire the assets from current PTOs, which including the buses, terminal etc.

If the lease of the assets is concurrently expired with the service contract in 2016, the govt can take over for free or nominal sum.

no one mentioned the rental and adveristing that SBS or SMRT is earning on these assets (interchanges)

The business will belong to the successful bidder, whoever it might be. It is unlikely run by LTA.

(22-05-2014, 10:38 AM)CityFarmer Wrote: [ -> ]

(22-05-2014, 10:27 AM)opmi Wrote: [ -> ]

(22-05-2014, 10:20 AM)CityFarmer Wrote: [ -> ]

(22-05-2014, 10:13 AM)GPD Wrote: [ -> ]Supposedly GOVT needs to compensate SBS Transit/SMRT for every route they acquired into the package?

The current contract ends around 2016, so no compensation needed for early termination, base on current plan. But the GOV should acquire the assets from current PTOs, which including the buses, terminal etc.

If the lease of the assets is concurrently expired with the service contract in 2016, the govt can take over for free or nominal sum.

no one mentioned the rental and adveristing that SBS or SMRT is earning on these assets (interchanges)

The business will belong to the successful bidder, whoever it might be. It is unlikely run by LTA.

That good too. Coz the rental and advert will cross subsidize
fare rev. Like in Changi airport concessions rentals which is used to
lower landing fees.

Better used for lower fare than flowing to shareholders.
Which I think PTC don't consider these non Tpt but high margins
rev in their fare revision.

Basically this new policy takes shareholder returns out of the equation.
Which misalign public Tpt providers interests with the public they served.

(22-05-2014, 10:28 AM)NTL Wrote: [ -> ]Will that mean that SBS and SMRT will be expected to collect a lump sum payout for their assets as and when the govt is taking over?

Will that imply a few rounds of special capital reduction since they are going to be asset light?

How about those retail areas? Are the govt taking over them too?

Yes, I was thinking along the line of SBSTransit/SMRT receiving a lump sum for their asset. I thought those routes are their earning and they might get some compensation as well but obviously they are not eligible for any. I thought SBSTransit will stands to benefit the most since they are the largest bus operator.

I initially thought the package approach might mean volatility in their revenue and profit since they might not win the package again when time due for renewal. However, I got the feeling that the same operator will just keep winning the same package over and over again until someone or something seriously cocks up. In the end, what the govt wants is smooth operational and stability in workforce. These coy will also capitalised on their experience with the routes of the packages and operation of those buses to score point during the bidding process. So unless someone seriously cocks up I think those officers in LTS accessing the bid will simply take the safest route of awarding the same packages to the same operator.

Any model also got problems - the annual inflation associated with service being provided by operators...

http://www.todayonline.com/singapore/bus...epage=true

Bus contracting model has worked in London, Perth

The bus contracting model in London has contributed to a rise in passenger journeys, from 2.2 billion in financial year 2008/2009 to 2.3 billion in 2012/2013. Photo: Bloomberg
BY
JOY FANG
PUBLISHED: MAY 22, 4:12 AM(PAGE 1 OF 1) - PAGINATE
Cities using the bus contracting model, under which the government assumes the role of master route planner and opens up the market to competition via a tender system, have seen improvements in bus service and reliability and a rise in customer satisfaction, analysts said. Joy Fang (joyfangz@mediacorp.com.sg) looks at how the system has worked in London and Perth.

LONDON’S EXPERIENCE

The London bus market was first privatised in 1985.

In 2001, the newly-formed Transport for London (TfL) introduced the Quality Incentive Contracts to replace the Gross Cost and Net Cost contracts as routes were tendered out.

The system, after which Singapore’s bus service reliability framework is modelled, offers to operators direct financial incentives, which are linked to the quality of service given.

London Buses, which is under TfL, is responsible for bus network planning, contracting and performance monitoring. It sets fares and retains revenue earned.

The bus operators own, manage and maintain the operating infrastructure and assets. The British capital has a fleet of about 8,500 buses, which ply more than 700 routes and have a common livery.

London Buses now has seven major and several smaller operators under contract to operate buses. Local players include Go-Ahead London and Sullivan Buses. Foreign players include Metroline, a subsidiary of Singapore’s ComfortDelGro; Arriva, a subsidiary of Germany’s Deutsche Bahn; and Australia’s Tower Transit.

Bus contracts are for a period of five years, with the option of a two-year extension, and packages are grouped in tranches of five to six routes. Staff transfer comes under the Transfer of Undertakings (Protection of Employment) Regulations 2006, which ensures that employees are not dismissed and that the most important terms and conditions of contracts remain fairly the same.

The new system has worked well, with bus ridership growing by 68 per cent between financial years 1999/2000 and 2007/2008. In 2008, the buses carried more than six million passengers per day. In its annual report released in July last year, TfL said passenger journeys in financial year 2012/2013 were 2.3 billion, up from 2.2 billion in 2008/2009.

However, fares have been on the rise. The Economist magazine reported in March that bus fares had increased by 59 per cent since 2005. This year also saw above-inflation fare hikes, which London Mayor Boris Johnson said were needed to ensure that the government has the funds needed to improve the network.

PERTH’S EXPERIENCE

In Perth, the contracting model was introduced in 1995 as part of public transport reforms.

The Public Transport Authority (PTA) is responsible for the operation of all bus, train and ferry public transport services in the greater metropolitan area under its Transperth brand. It owns the operating infrastructure and assets and leases them to operators, which not only manage and maintain them, but also run the services.

Operators are under contractual requirement to ensure consistent remuneration and terms of employment. They are also required to offer employment to a minimum 90 per cent of permanent staff hired by the incumbent for each contract area.

Contracts are for 10 years, with packages of about 20 to 40 routes. There are three bus operators running a fleet of more than 1,300 buses for more than 290 routes. The operators are Path Transit, a subsidiary of Australian Transit Enterprises; Swan Transit, a subsidiary of Transit Systems, which also runs Tower Transit; and Transdev Perth, a subsidiary of France-based Transdev.

In its annual report released in June last year, the PTA said ridership has continued to rise. There were 83.5 million passenger boardings on Perth bus services in the year 2012/2013, up from 73.5 million in 2008/2009.

While passengers currently pay only about one-third the cost of providing the public transport service, Western Australia Premier Colin Barnett said in an interview earlier this year that he expected them to pay as much as half the cost eventually.

PUBLISHED MAY 22, 2014
COMMENTARY

Bus sector revamp: better late than never?
BYSAMUEL EE
samuelee@sph.com.sg

No-brainer: If excess capacity and investments are sacrificed for the bottom line, only transport operators benefit, not the travelling public - which is ironic, since buses are supposed to be a public service.
-Is excess capacity a bad thing when it can make urban travel more pleasant? How can higher frequency be a disincentive for taking the bus, when it could wean S'poreans off their cars?
application/pdf iCONCreating a new framework: case studies

NOW that the government is finally stepping in to lend a hand in public bus operations, many long-suffering commuters are likely to say "it's about time".
After repeatedly refusing to run buses itself - even as it acknowledged that commercial operators plan bus routes based on commercial considerations - the government will now own buses and other operating assets, previously the domain of public transport operators.
It will manage these assets and determine bus routes as it invites private operators to tender for them, thus insulating these companies from operational losses - which have plagued the existing operators in recent years and dissuaded them from raising capacity and service levels.
This competitive tender model is not new; London Buses subscribes successfully to it and Singapore's ComfortDelGro is one of the many private operators running some of its routes profitably (ComfortDelGro unit SBS Transit operates three-quarters of Singapore's public buses, while SMRT runs the remainder).
So why is it taking so long to get decent public land transport here? Overcrowding, bus bunching and an interminable wait remain common grouses. The situation is particularly egregious when contrasted against Singapore's world-class air and sea travel.
To be fair, there have been changes over the years but the pace has been glacial. In 2009, the government took over the planning of bus routes from the two operators - one year after it decided to assume the role of central bus network planner for a more commuter- centric focus. In 2010, the government implemented a quarterly review of bus services. Two years ago, it realised it had to spend $1.1 billion on 800 new buses to meet increased demand.
The simple reason has to be that the government was averse to spending on buses, preferring instead to let the private sector manage them more "cost-effectively". Any direct involvement, like running the bus network under the Tokyo metropolitan model, is expensive. Even London Buses has to provide an annual subsidy of £500 million (S$1.05 billion) for contract work.
Underlying this laissez-faire policy is the belief that a purely commercial entity will be more efficient in providing transport services without the wastage and excess capacity that a nationalised or non-private entity may generate. But the inadequacies exposed in bus services in recent years here suggest that this approach may not always be the best.
Is excess capacity a bad thing when it can make urban travel more pleasant? How can increased frequency be a disincentive for taking the bus, especially when it is the cheapest alternative to a door-to-door service that could wean Singaporeans off their cars - which is also a policy objective?
Even in the details, the gaps show. Fares aside, anyone who has caught a bus in London or Tokyo can always count on a timely and accurate bus schedule, if not a comfortable seat. Singapore may pride itself on having a leading edge in many areas - but public transport is not one of them. The absence of arrival time information at all bus-stops is just one symptom.
If excess capacity is avoided and investments are sacrificed for the bottom line, it is transport operators and their shareholders who benefit, not the travelling public - which is ironic, since buses are supposed to be a public service.
But like the commuter whose bus finally arrives after a long wait, maybe the only thing he will say now - with a sigh - is: "Better late than never." The proof of the pudding, however, is in the eating.

Qn: Do Sbs or Smrt pay for COEs for their buses?

If not, Govt ownership means lower capex.

Answered my own question.

http://www.ptc.gov.sg/regulation/fareRegulation.htm

Fare Regulation Framework

Public bus and train services are provided on a commercial basis, within the maximum fares approved by PTC. The Government does not provide direct subsidies for public transport operations.

To keep public transport fares affordable to the general public, public transport infrastructures such as MRT/LRT lines and bus interchanges are funded entirely by the Government. In addition, public buses are also exempted from COE (Certificate of Entitlement) payments. The Government also pays for the development and software cost of the contactless smartcard system. Therefore, bus and train operators are only responsible for operations, maintenance costs and investments in service improvements.

In regulating bus and train fares, the PTC carries out its statutory mandate to safeguard public interest by keeping fares affordable while ensuring the long-term financial viability of the public transport operators.

(22-05-2014, 10:28 AM)NTL Wrote: [ -> ]Will that mean that SBS and SMRT will be expected to collect a lump sum payout for their assets as and when the govt is taking over?

Will that imply a few rounds of special capital reduction since they are going to be asset light?

How about those retail areas? Are the govt taking over them too?

i am interested in the retail areas.

To me, it looks like government is taking over the retail area since they are buying the assets.
However, i can't see government managing the retail area.
Will the government subsequently chop off the retail area to companies like capitaland?

A SMRT without retail income is perhaps not so attractive especially after the possible capital reduction as a result of the sale of the assets.

SBS Transit looks to be the biggest winner (CD, SMRT, SBS Transit) with the possibility of capital reduction and its sheer number of privately owned buses (not all its buses are funded by its own capital but it should be more than SMRT). If CD wants to use this money to further expand overseas, then SBS Transit will be paying their special dividends upwards to its parent...

Of course, Mr Market seems to have voted for this.