Government to review rail operators’ non-fare businesses

This article is more than 12 months old

The Government will review the current practice of automatically allowing rail operators to run non-transit businesses on the MRT lines that they operate.

In response to queries from The Straits Times, the Land Transport Authority (LTA) said yesterday it has called a tender "for a consultant to provide advisory services for the rail non-fare business".

This was in line with what it said last month when it awarded the operating contract for the upcoming Thomson-East Coast Line (TEL) to SMRT - that it would be calling a separate tender next year for the line's non-fare business.

An LTA spokesman said the Government will consider the results from outsourcing the TEL's non-fare business and conduct "a thorough review" before making any recommendations for existing rail lines.

According to recent financial results, non-fare profits for both SMRT and SBS Transit have outstripped those for their core businesses in recent years.

Singapore University of Social Sciences economist Walter Theseira said outsourcing the non-fare business "eliminates a potential distraction for the transport operator's management".

He added: "I suspect that is the most important reason.

"A secondary reason is that it will help to focus attention simply on whether the operator is good or bad at running transport services. An operator cannot hide deficiencies in transport operations through profits from non-core businesses. This will probably help improve contestability, since the contest to run public transport services will be based only on competence at running core services."

But he noted that because non-fare business currently subsidises a transport operator's operations, taxpayers may end up bearing some consequences.

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