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Industry Profile


Public Transport in Singapore
2.1 Rail Networks (MRT & LRT)
2.2 Bus Networks
2.3 Taxi Sector


Industry Developments
3.1 Government Contracting Model (GCM)
3.2 Bus Services Enhancement Programme
3.3 New Rail Financing Framework (NRFF)
3.4 Rail network expansion


PESTEL Analysis
4.1 Political/Legal
4.2 Economic
4.3 Social
4.4 Technological
4.5 Environmental


Porter’s 5 Forces Analysis
5.1 Threat of New Entrants
5.2 Threat of Substitutes
5.3 Buyers’ Power
5.4 Suppliers’ Power
5.5 Competitive Rivalry


Industry Risks
6.1 Cost Structure
6.2 Highly Regulated Environment
6.3 Competition


Critical Success Factors
7.1 Sustained demand & growth
7.2 Government initiatives
7.3 Well-integrated transport network


Market Trends & Outlook
8.1 Contracting models
8.2 Redefining business models
8.3 Intelligent transport systems
8.4 Green technology



“A developed country
is one in which rich
people use public
Alda Poon ● Jackson Heng

Industry Analysis: Public Transport
Public transport systems are a pervasive feature in modern society today. In many developed countries,
public transport plays a crucial role in citizens’ lives, serving as a basic means of travelling. With increasing
land and road constraints, such as in dense cities like Hong Kong and Singapore, on top of environmental
concerns such as air pollution (e.g. France), the demand for public transport will only continue to rise as
urban populations expand. The Singapore public transport system has evolved since its inception to a highly
modernized system and has been ranked as one of the world’s most efficient 1.

1. Industry Profile
Public transport systems are a pervasive feature in many major urban cities around the world today. In Shanghai, more
than 13 million trips are made on public bus and/or rail. Daily public transport ridership in Hong Kong amounts to
approximately 8.5 million. In Singapore, a city-state of only 716.1 square kilometers in area, 6 million trips are made daily
on the public transport system (Table 1). In all of these major cities, public transport plays a crucial role in citizens’ lives,
serving as a basic means of travelling, while also being essential for enhancing the economic, social, and environmental
health of the cities.

Hong Kong
New York

land area


Public Transport Usage (Daily Ridership ‘000)
Rail (MRT & LRT)
Public Bus



Table 1: Public transport around the world
Source: LTA

2. Public transport in Singapore
Public transport within Singapore is mainly land-based since many parts of Singapore are accessible by road, including
nearby islands such as Sentosa and Jurong Island. The main modes of public transport are bus, rail and taxis.
Choice mode of travelling
Due to land and road constraints, the Singapore Government highly
encourages public transport over private transport. Roads already
account for a significant 12% of the island’s total land area (fig. 1).
Given the scarce land area available, there will have to be a tradeoff between using land space for roads and for other more pressing
purposes, such as housing.
Personal vehicle population growth is also controlled by the
Government through the Certificate of Entitlement (COE) system,
effective since 19902, where potential car owners have to bid for
the right to own a car, driving up the cost of car ownership and
rendering it financially unfeasible for many, although private car
population has still been steadily increasing (fig. 2). To further
discourage car usage, the Electronic Road Pricing (ERP)3 system
serves as an automatic congestion charging tool at various locations
in the city area; and a Government-implemented vehicle ownership
policy aims to keep vehicle population growth at a long-term rate of
0.5%, down from 1.5%4.

Figure 1. Usage of land in Singapore
Source: Land Transport Master Plan 2013 (LTMP 2013)

With such barriers to private car ownership, public transport has become the
default mode of travelling for many Singaporeans. From 2008 to 2012, public
transport journeys have risen, with 63% of all trips made on some mode of
public transport (fig. 3).
The Government is aiming for at least 75% of all trips to be made on public
transport by 2030, when the population is projected to reach 6.9 million 5.
Proportion of commuter ridership 1997 – 2012

Figure 2. Private car population 2008 - 2012
Source: LTA Statistics in Brief 2010-2013

Figure 3. Proportion of public transport ridership
Source: LTA

Given its importance in everyday life, the public transport system in Singapore is tightly controlled and regulated by the
Government: the Land Transport Authority (LTA) has been the central planner for all routes since 2009 while bus and rail
fare schemes and service standards are managed by the Public Transport Council (PTC)6. Policies by the LTA are in line
with the Government’s aim to promote higher usage of public transport, such as providing incentives to travel outside of
peak periods to reduce congestion.
Duopolistic bus & rail sector
While the local taxi sector is relatively saturated with 6 different cab operators, the bus and rail sectors are operated
within a duopolistic framework between 2 public transport operators (PTOs), state-backed SMRT Corp (SMRT) and SBS
Transit Ltd (SBS), although plans and initiatives have already been undertaken to move these two sectors towards a more
competitive operating model.
As a mature and defensive industry not subjected to the ebbs and flows of the business cycle given the inelasticity of
demand for its services, the public transport sector in Singapore is expected to see further growth as the population
continues to rise.

2.1 Rail Networks (MRT & LRT)
A contentious beginning
The concept of a rail system was proposed as early as
1967; two years after Singapore had become
independent. However, then-Trade and Industry
Minister Dr Tony Tan and then-Finance Minister Dr. Goh
Keng Swee both objected to the rail system, worried that
its immense cost could drag down the country’s
economy. Instead, they had wanted to put more focus on
public housing.
On the other hand, former Minister for Communications
and Labour, an advocate for the mass rapid transit
(MRT) system, argued that it would have a tremendous
influence in shaping the economic growth and
development of Singapore, citing examples of cities such
as Toronto, Chicago and Marseille, noting that an
efficient MRT system could also help in enhancing the
image of Singapore, and increase the overall standard of
living for Singaporeans.
The decision to finally build a mass transit rail system
was approved only in May 1982 7, after the
Comprehensive Traffic Study in 1981 showed that an allbus system in Singapore was not practical and efficient,
and a rail system was recommended.

MRT system was deemed as a success on the whole by
1988, although it was not without initial socioeconomic
problems such as affected businesses and traffic
congestion during extensive construction works.
The MRT system today
Despite its teething problems, the MRT rail network
system is today, the backbone of Singapore’s public
transport system, spanning 178km across nearly every
part of the island, with an average daily ridership of 2.65
million8. A total of 108 stations are now in operation
across 5 different rail lines: the North-South, East-West
and Circle Lines operated by SMRT, and the North-East
and incomplete Downtown Lines operated by SBS. There
currently exist 2 main types of rail transport: the MRT
and the Light Rapid Transit (LRT). The LRT network
commenced in 1999 with only 1 line within the Bukit
Panjang area (north-west of Singapore) but has since
expanded to include 2 more lines over a total of 28.8km,
servicing the Sengkang and Punggol areas as well, both
in the north-eastern part of Singapore. More than 30
MRT stations serve as public transport hubs where
commuters can interchange between train rides and bus

The North-South and East-West Lines (NSEWL) both
opened within a month of each other in 1987, and the


May 1982:
Approved for


Jul 1990:
More than 40
stations in


North-East Line

Circle Line (CCL)

Downtown Line

108 stations in

Sector structure & players
SMRT is currently the dominant player in the rail sector duopoly, holding a
78% market share with the operations of 3 MRT lines, while SBS holds the
remaining 22%. The opening of the Downtown Line (operated by SBS) has
seen the LTA take steps towards a more nationalized model, with the
Government now owning operating assets and infrastructure maintenance.
Such a framework also means a shorter license period for rail operators,
which the LTA hopes will introduce more competition in the long run and
drive efficiency and service standards.
2.2 Bus Networks
Bus services form a significant portion of public
transport in Singapore in the present-day, with an
average daily ridership of nearly 3.5 million. As of 2012,
there were 37 bus interchanges and terminals; and over
4600 bus stops in operation on the island. Several types
of bus services ply through the island, most common of
which are the trunk routes, which connect towns; feeder
routes, which operate only within a neighbourhood;

express routes which generally have lesser bus stops
during a journey; and NightRider services, the afterhours services on weekends and public holidays.

Early origins
The local bus sector has its origins from before the
independence of Singapore in 1965 but had been
plagued with problems such as incapacity and poor
management, service standards and quality; largely the
result of a long-term monopoly of the Singapore Traction
Company (STC), which served then as the island’s main
bus operator and had no direct competition. Coupled
with labour unrest in the 1950s, culminating in the
infamous Hock Lee bus riots in 1955 and STC’s 146-day
strike in 1956, conditions within the bus sector were
chaotic and unreliable.
With government intervention in the early 1970s, the
bus sector became more organized and more bus
operators joined the industry, although STC retained its
monopoly. Despite its reorganization, service standards
were still subpar, so in 1973, the main incumbent bus
companies, including STC formed the Singapore Bus
Service (a predecessor to SBS). Trans-Island Bus Services
Ltd (TIBS) was formed in 1982 with an aim to inject
competition into the bus sector, to drive bus operators to
improve their services and efficiency.
Sector structure & players
With the formation of TIBS in 1982, a duopoly was
effectively established within the bus sector. TIBS was
later subsumed by SMRT in 2004, so that the duopoly in

the bus sector would later become the same duopoly in
the rail sector. Having had a much earlier head start in
the industry than TIBS/later-SMRT, SBS currently
dominates the bus sector with 75% share, while SMRT
holds 25%. Today, average daily bus ridership amounts
to approximately 3.5 million9.

Both bus operators have traditionally owned all their
own operating assets and infrastructure. However, in an
effort to nationalize the bus sector, the LTA had
announced in May 2014 a transition to a new model, the
Government Contracting Model (GCM)10, which will see
the Government now owning all such assets from the
operators and dissolving the duopolistic structure by
putting up bus routes for bid to all available and viable
bus operators, locally and internationally.

2.3 Taxi Sector
Taxicabs are
of public
transport in Singapore, although with an average daily
ridership of 0.97 million, it is still considerably less
preferred compared to bus and rail services11.

establishments. Taxis may also be booked via telephone
or through the internet for a fee, which is then
transmitted to individual taxis via a Global Positioning
System or digital voice dispatch.

The first taxis
The first taxis began their services shortly after
Singapore’s independence in 196512. With a much more
lax system back then, passengers were allowed to
negotiate fare, and “pirate cabs” were ubiquitous: private
cars being used as unlicensed public-service transport
vehicles. On the other hand, there had to be a ballot
system for official taxi drivers to be chosen, carried out
by then-Prime Minister, Lee Kuan Yew.

Stringent requirements imposed by LTA ensure that all
taxis are fitted with meters and are air-conditioned and
serviceable. Drivers who fail to utilise their meters may
be fined up to S$50015, an enforced rule which brings
fare disputes down to a minimum.

Taxis today
Today regulated by the LTA, taxi operators are required
to have an LTA-issued Taxi Operational Licence in order
to provide taxi hire services. Under this license, taxi
operators are required to comply with LTA’s Quality of
Service (QoS)13 standards, codes of practices and audit
directions, failure of which may lead to revocation of
license, as evidenced by the non-renewal of SMART Cab’s
license in 2013.
Taxis can be flagged down at any time of the day along
any public road outside of the Central Business District14,
where taxi drivers are not allowed, except on weekends
and public holidays, to pick up or drop off passengers
along the main roads for the safety of passengers, taxi
drivers and other road users. Taxi stands, a designated
area where one may find a cab for hire, are common at
shopping malls, office buildings and other downtown

All taxi drivers in Singapore are required to hold a valid
Taxi Driver's Vocational Licence (TDVL)16 issued by the
Land Transport Authority, after having met basic
prerequisites and successfully completed a training
course in the Singapore Taxi Academy and passing a
theory test. Holders of the licence may then approach
any of the taxi companies to hire a taxi on a daily rental
basis, the rental rate and associated benefits of which
vary among the various companies. As at June 2014,
there were a total of 99,711 TDVL holders in Singapore17.
Taxi fares are counted on the meter and are based on an
initial flag-down rate and the total distance travelled
with additional surcharges wherever applicable (e.g.
booking, midnight or peak hour charges). Taxi fares were
regulated by the PTC until September 199818, when
operators were allowed some freedom in setting their
own fares in a bid to introduce greater competition in
the market although fares still have to be in accordance
to standards set by LTA for flag-down rates, distance
fares and waiting time rates for regular taxicabs.

Sector structure & players

Table 2. Local taxi companies & their fleet size
Taxi Holding
ComfortDelGro Corp
Ltd. (CDG)

Taxi Brand

Fleet size


SMRT Taxis


Trans-Cab Services



Unlike the bus and rail sectors, the taxi sector is
Premier Taxis
relatively saturated with market players. As of June
2014, the total taxi fleet in Singapore is 27,865 taxis,
operated by six taxi companies and 232 independent
Prime Car Rental &
drivers. Out of these 6 taxi companies, however, 2,
Taxi Services
Comfort Cab and CityCab, are owned by ComfortDelGro
(CDG), parent company of SBS; and 1 is owned by SMRT.
Source: LTA
Table 2 shows the fleet sizes of each taxi company.
Comfort and CityCab combined own a fleet size of more than 16.7k, while SMRT alone owns a 3227-strong fleet. Therefore,
although not a clear duopolistic structure in this case, market dominance is still held mainly by 2 players.
3. Industry developments
3.1 Government Contracting Model (GCM)
In June 2014, the LTA announced that it will restructure
the public industry to a ‘semi-nationalised’ Government
contracting model (GCM) with effect from late 2014,
although fuller implementation is expected to take place
only in the second half of 2016, when the Bus Service
Operating Licenses for the 2 incumbent bus operators
expire19. Under the new model, a competitive tendering
process will be used by the LTA to contract out bus route
services in terms of 5 years20. Based on the level of
service stipulated by the LTA as well as all associated
operating costs, bus operators will bid for the right to run
the routes.
All bus infrastructure will be owned by the Government,
and they will also retain all collected fare revenue.
The implementation of this model is in line with the
Government’s aim to respond to rising travel demand
and service level expectations while also lowering entry
barriers into the bus sector to ensure greater
Furthermore, it is recognized that under the current
privatized industry model, incumbent operators do not
have much incentive to improve service standards as
much as commuters demand since as profit-driven
business enterprises, they are also expected by their
shareholders, to cover their capital and operating
expenses and earn their returns from fare revenue.
The model will be rolled out in gradual phases,
with only 20% of existing buses tendered out
initially, while the remaining 80% of buses will
continue to be operated by the incumbent
operators21. However, it is expected that more bus
packages will be opened up to new operators for
bid in time to come.

3.2 Bus Services Enhancement Programme (BSEP)
Launched in 2012, the objective of the Bus Services Enhancement Programme (BSEP)20 was to introduce new bus routes
and enhance existing bus services so as to reduce crowding and increase bus frequencies, two issues that many commuters
have concerns about. The Government therefore partnered up with the two incumbent PTOs to significantly ramp up bus
capacity and bus service levels by providing funding for 550 buses. Together with the 250 buses injected by the PTOs at
their own cost, as well as the City Direct Services and Peak Period Short Services run by private bus operators, it will
increase Singapore’s total bus fleet available for public bus services by 35%. Included in the funding are salaries for new
bus drivers as well as all other operating costs for the running of the buses.

Launch of BSEP 2012: More than 50 trunk route enhancements as
well as over 10 feeder route improvements from Oct 2012. 18 new
services were also added.

BSEP in 2013: More than 60 trunk route enhancements and
14 new bus services

As of June 2014, a total of 361 Government-funded buses have
been added under the programme, and PTOs have also
improved their service level standards by deploying higher
capacity buses and adding more bus trips along areas which
experience heavy ridership. The BSEP is also set to be
expanded23, with the Government financing 450 more buses,
bringing the total number of Government-funded buses to
1,000 by 2017.
BSEP in 2014: More than 30 trunk route enhancements and
3 new bus services

3.3 New Rail Financing Framework (NRFF)
Less publicized than the GCM, the New Rail Financing Framework (NRFF)24 was put in place in 2010 to facilitate the future
expansion of the Rapid Transit System network in a financially sustainable manner; and to inject greater contestability
into the rail industry.
LTA will take ownership of rail operating assets and lease them to operators instead, but before doing so, incumbent train
operators’ assets have to be appropriately valued and bought over. Rail operating licenses for new rail lines will be shorted
to 15 years, and operators will pay a license charge for the right to run rail services and generate revenue. The license
charge collected will be used to replace and enhance operating equipment such as trains, signaling systems and other
operating assets. The license charge also comprises fixed and variable components. The fixed component is calibrated to
take into account factors such as the viability of the line, its long-term operational and maintenance needs, and the benefits
and costs that the line is likely to bring to/impose on the rest of the railway network. The variable component ensures the
appropriate level of risk-sharing between government and the operator.
SBS’s Downtown Line was the first25, and remains the only, MRT line to operate under this model, since developments to
further the NRFF have so far seen little progress, although negotiations that remain confidential between incumbent
operator SMRT and LTA are ongoing26.
3.4 Rail network expansion
Outlined in the 2013 LTMP 2013 are plans to expand the current rail network system 27, doubling it to 360km in length by
2030, an aim to substantially increase rail capacity to meet increased ridership demand as well as provide more
connections to the places where commuters live, work and play. Two new rail lines will be constructed and there will be
extensions to 3 existing lines. The Cross Island Line, with targeted completion by 2030, will serve as an alternative to the
East-West line and help to relieve the load on currently overloaded train lines so as to shorten travel times. With the
Jurong Region Line, which has a projected completion by 2025, the intra-connectivity of the west (Jurong) area will be

enhanced and residents in both the west and north-west regions of the island will be able to take advantage of additional
train services, lifting some pressure off the existing North-West line. In the near term, Phases 2 and 3 of the Downtown
Line are set to be completed by 201728 and will serve 34 stations in total29.
What commuters can expect in the coming years

4. PESTEL Analysis
4.1 Political/Legal
Given the importance of public transportation within a
nation, it is not surprising that the running of the public
transport system is politically influenced and involves
much legislation.
Regulated Fares
In Singapore, fares are regulated by the government via
the PTC to ensure that they remain affordable to the
commuters. This means that not only are the operators
not able to price the fares, the fares may not always be a
true representation of what it actually costs to run their
operations. This is reflected in the losses both CDG and
SMRT have been incurring in their core public scheduled
bus operations since 201130 and 200931 respectively,
owing to operating costs rising much faster and higher
than can be met by their fare revenues; although outlook
on that regard is set to be positive with the upcoming
implementation of the GCM.
Quality of Standards (QoS)
Implemented by the LTA, QoS have to be met by the
PTOs so as to ensure that services are up to par. One QoS
stipulates the percentage of calls that has to be answered
at a taxi call centre, and the time limit for the despatch
centre to match a cab, among other criteria32.
In order to meet these standards, PTOs have to invest
not only in the necessary infrastructure, but also
continuous expansion and upkeep of its infrastructure to
keep up with demand. This would thus require further
capital expenditure from the PTOs and has to date been
as aspect of high entry barriers into the public transport

limiting the amount of bank loan one could take to
purchase a car, car ownership is out of reach for many
Singaporeans. The only alternative they have then is to
take the public transport, which would in turn translate
into sustainably high demand for PTOs’ services.
Emissions Regulations
With nearly all buses powered by
emission is an important issue. In
pollution, the Government requires
vehicles to be compliant with Euro 5
effect from 201435.

diesel engines,
order to curb
all new diesel
standards with

This translates into the need for PTOs to spend on
vehicles which meet the required standards. While the
PTOs will be relieved of the necessity to acquire buses
under the GCM, they will still need to purchase their own
taxi fleets. As such, emissions regulations will continue
to play an important role in the vehicles they purchase.
Concern over duopolistic nature
The LTA’s initiative to open up the bus and rail sectors to
more competition with the GCM and NRFF model have
also been driven by increasing public displeasure with
the duopolistic nature of these sectors, especially with
one of the incumbent PTOs being state-backed (SMRT).
With public scrutiny over what they think is the
complacency of the incumbents over their market
position within public transport industry36,37, the LTA
seems to be aware of the political importance of
introducing more competition.
4.2 Economic

Car Ownership Restrictions
In view of the limited land space in Singapore, the
Government has been both promoting public transport
and controlling the car population in Singapore through
Vehicle Quota System (VQS)33 and COEs34.

Labour and Wages
With an operator required for all vehicles except
automated trains, the public transport industry is labour
intensive. As such, labour cost is a key component of
operating expenses, and with annual wages increasing
between 4.4 to 5.1 per cent since 2011 (Table 3), labour
cost is one aspect the PTOs cannot overlook.

Potential car owners are to bid for a COE before being
eligible to own a car. While the market is left to decide on
how much they are willing to pay, the limited supply
means the price of a COE is usually quite high. Coupled
with recent measures to curb car ownership, such as

Rising wages add to operating costs, eating into
operating profits. It is thus imperative that PTOs keep
labour costs under control. To this end, driverless trains
have been introduced into the newer lines which helps
reduce labour requirements. However, with driverless

bus unlikely in the near future, PTOs will have to
continue striking the delicate balance between an







Table 4. Annual Wage Changes 2007 - 2013
Source: Survey on Annual Wage Changes, MOM

4.3 Social

4.4 Technological

Commuters’ expectations
With private car ownership priced out of reach for most
Singaporeans, there is little choice for them besides
public transport for their daily commute. Since
commuters spend a significant portion of a day on public
transport, there is a demand for comfort and better

Mobile Apps
Along with the surge in the popularity of smart phones in
recent years, mobile apps that allow convenient booking
of either taxis or private hire cars, such as GrabTaxi40 or
San-Franciscan-based Uber41, have also risen in demand.

Moreover, with the influx of foreigners into the country
in recent years, demand for public transport has
increased substantially, leading to overcrowding and
delays. Train breakdowns have also been frequent in the
past few years – more than 20 in 2013 alone38 – due to
aging infrastructure; and have caused members of the
public to take to newspaper or online forums to voice
their displeasure.
In a bid to combat these problems, the Government has
introduced expansion plans and initiatives which will
effectively restructure much of the public transport
industry. These include plans to double the rail network
by 2030; the BSEP which will bring out an addition of
1,000 new buses, or a 35% increase in total bus fleet
size; as well as the GCM and the NRFF to drive higher
competition and efficiency in the bus and rail sectors. A
2-year collaboration between LTA, IBM, SMRT and
Starhub, known as FASTER39, is also in place to help
improve response times and crowd management during
train breakdowns using data analytics.
While the GCM and NRFF will see the Government
assuming operating cost concerns, the PTOs will still
have their work cut out for them as they have to ensure
that their services are up to standard or risk losing their
bus tenders or rail licenses to competitors. This may
mean incurring higher cost to closer monitor their
operations to ensure that they run smoothly.

While they may help to reduce the load on the taxi
operators’ call centres, the apps charge a fee for its
services, thereby earning off the taxi operators’
operations. Moreover, services like GrabTaxi and Uber
do compete outright for a portion of the taxi market.
Judging from recent consensus, the local taxi sector has
its own detractors for what the public views to be
inefficiency as well as ‘haphazard pricing’42,43. Therefore,
with much of Singapore’s urban population being highly
technologically-savvy, alternatives that promise higher
efficiency with possibly cheaper fares will pose as a
viable threat to the taxi sector, which may see a price
war where operators reduce their rental charges and
increase driver benefits to attract more drivers to join
their company.
4.5 Environment
Apart from the emission regulations that the PTOs have
to meet, it is also in the PTOs’ interest to have an
environmentally friendly fleet given their huge fleet size
and the current public interest on environmental
To date, the PTOs have experimented with hybrid
vehicles which typically have lower emission, better fuel
consumption or both. For example, SMRT has hybrid
taxis44 while SBS has trialed hybrid buses45.
Moving forward, as technology improves and
environmental-friendly vehicles become more common,
PTOs are expected to make the switch to such vehicles
which will still cost premium over conventional vehicles,
increasing their operating expenses to accommodate the
cost of environmentally-sustainable fleets.

5. Porter’s 5 Forces Analysis
5.1 Threat of New Entrants
Bus sector
Currently, the barriers to entry to the public bus industry
are high. Apart from having to adhere to strict standards
specified by the PTC, the new entrants also have to
purchase their own buses and depots, which form a
major portion of their capital expenditure. Moreover,
there is a need for bus operators to expand their fleets to
meet rising demand. With a larger fleet, maintenance
costs will also be high.
However, upon the implementation of the GCM in 2016,
barriers to entry into the bus sector will be substantially
lowered and there will be more room for other
competitors, both local and foreign.
Rail sector
Similar to the public bus industry, barriers to entry into
the rail sector are also high; perhaps more so than for
the bus sector, since rail infrastructure and vehicles tend
to be on a much larger scale than bus infrastructure.
Locally, rail operators have to buy over rail operating
assets from the Government before operations.
In 2010, a new rail operating model was introduced with
the commissioning of the Downtown Line, run by SBS.
Under the NRFF, all rail infrastructure would now be
owned by the Government, and operators no longer have
to buy over operating assets. Instead, operators pay a fee
for a 15-year license for the rights to service a rail line.
The aim of the license period, shortened from 30-40
years, was to inject more competition into the rail sector.
This way, complacency of a long-term tenure will be
reduced, prompting operators to make efforts to
maintain or improve their service standards.
Nevertheless, talks to further the NRFF into a more
advanced stage have not been able to progress much due
to ongoing negotiations between the LTA and incumbent
SMRT. However, it is expected that the NRFF will
eventually be more fully implemented in the near future.
With the NRFF in place, high capital expenditure on
operating assets would no longer be necessary open up
the sector to more bidders.
Taxi sector
The threat of new entrants into the taxi sector is
relatively low. Potential taxi operators would need to
meet all of LTA’s requirements before being awarded a
license to operate. Upfront capital expenditures include
spending on a required minimum taxi fleet size of 800, as
stipulated by LTA, to ensure that individual taxi
companies have sufficient critical mass to provide an
adequate level of service to the commuters46; a call
centre and enough staff to ensure that at least 95% of
calls to taxi booking hotlines are answered within 20
seconds, among other call centre standards; and enough
manpower to ensure that at least 80% (small taxi
companies) or 92% (large taxi companies) of calls are
successfully matched with a taxi.

Taxi operators also have to ensure that they adhere to
LTA’s Taxi Availability Standards, under which 80% of
the fleet must clock at least 250km on the road daily to
meet demand. This standard will be set even higher at
85% in 2015.
In order to keep in line with official standards and
regulations, incumbent taxi operators already find
themselves having to invest a substantial amount to
ensure that their taxi fleets and services remain up to
par. New entrants into the sector will likely have to
invest much more to keep up and compete with existing
5.2 Threat of Substitutes
Bus and Rail sectors
The threat of substitution in the bus and rail sectors is
relatively low as there are little alternatives to taking
buses and trains, although commuters may choose to
take a bus over a train ride. However, currently most bus
services do not ply the same route as train lines so as to
avoid duplication of services. Moreover, given the
limitations of rail services, commuters may require
feeder bus services to get to their exact destinations. In
this light, buses and rail services complement each other,
rather than substitute one another.
As mentioned before, private transportation such as cars
are heavily taxed, almost to a punitive level, putting car
ownership out of reach for many Singaporeans.
Other forms of private transportation, such as cycling,
have been slowly rising in popularity for travel over
short distances, most commonly from home to a
transport hub like a bus or MRT interchange. In fact, with
the LTA’s recent issuance of a Request for Information
on the prospect of bicycle-sharing47, the number of
cyclists is expected to grow as the Government seeks to
make cycling a more convenient option. Despite that,
cycling is not likely to take over the role of bus and rail
services; rather, it is intended to complement the public
transport industry and taking some pressure off
overloaded feeder bus services. Moreover, cycling over
long distances in Singapore has been deemed unfeasible
by most Singaporeans due to the humid and
unpredictable weather.
Taxis are also an alternative to buses and trains, but are
costlier and considered impractical by average
Singaporeans to take daily, and therefore not likely to
fully substitute bus and train services.
Taxi sector
Taxi operators, on the other hand, do face the threat of
substitute services impeding on their respective market
Carpooling and mobile apps for private car hire services
have been increasing in popularity in major cities,

including in Singapore, where UberX, a low-cost version
of the San-Franciscan-based private car hire service, was
recently launched48.
Carpooling is typically cheaper than taxi rides, as well as
more convenient with shorter travelling times, although
it is not always possible to match a passenger with an
appropriate carpool. Private car hire services are on the
whole, costlier than regular cabs: UberX’s per km rate at
$0.70 is more than 27% higher than regular taxis’ rate of
$0.55 per km49,50. However, with mounting
dissatisfaction of with late with the taxi sector due to
difficulties in hailing a cab, in part due to only 2 out of
the 6 operators plying the roads as much as they were
required (Table 4) or irregular pricing, passengers are
more likely to be willing to pay a premium for higher
efficiency and comfort.
June 2014

Standard to
80% of taxi
fleet to meet
250km daily



While the Government encourages carpooling to a
certain extent51, to cool demand for private car
ownership as well as to reduce congestion, private car
hire services are currently not regulated52, since such
services cannot be ‘flagged down’, or ‘hailed’ from the
street as one would a regular taxi; rather, they are
booked in advance. This may provide a cost advantage
for such service providers since they have fewer
regulations to adhere to. However, it is foreseeable that
should services such as UberX become a long-term
fixture in the local public transport system, they will
eventually be regulated by the LTA, with the possible
effect of lowering their financial viability and reducing
their overall local presence. In fact, the service has
already been banned in South Korea53, while also facing
regulatory pressure in various states back in the United





Table 4: Minimum daily mileage per taxi
Source: LTA Taxi Availability Results

5.3 Buyer’s Power
Given that public transport is a daily essential in most Singaporeans’ lives, demand for it can be considered inelastic. With
fares controlled by the PTC, there is no room for bargaining and commuters therefore have very little real influence over
fare prices, only able to take to newspaper columns and online social media platforms to voice their displeasure 55.
In fact,
a downward
Taxi Availability

trend of customer satisfaction with public transport in recent years (fig. 5), commuter
ridership for bus and rail services has still increased (fig. 6). It is expected that the trend will continue as the population
increases and as the Government continues to make conscious efforts to improve and enhance public transport systems.

Figure 5. Customer Satisfaction with public transport in
Singapore has seen a significant dip in recent years.
Source: LTA (1, 2, 3, 4)

5.4 Suppliers’ Power
Bus and Rail sectors
With most buses powered by diesel, fuel cost is a crucial
operating cost for the local PTOs. Moreover, due to
vehicle specifications, energy inputs are not normally
substitutable for one another, so PTOs have an inelastic
demand for diesel and have no choice but to be a pricetaker.
Influenced by the 12-nation OPEC cartel, diesel and fuel
prices have fluctuated considerably in the past 5 years
(fig. 7). In 2014, the price for crude oil, from which diesel

Figure 6. Public transport ridership has soared since
Source: LTA Statistics in Brief 2009 – 2013

produced, is at one of its highest in years at USD 104.63
per barrel56. However, with an expected fall in crude oil
prices due to waning growth in China57, one of the
world’s largest importers of the commodity, gasoline and
diesel prices are also expected to follow a downward
trend in the near future58. Nevertheless, with robust
demand for diesel likely to continue throughout the
global transport sector, diesel prices are not expected to
fall drastically or too quickly59.

Diesel Monthly Prices (2009 – 2014)

day62, amounting to more than S$3,000 a month, while
renting a car from UberX would be half that amount at
In order to ensure that they have enough manpower to
meet LTA’s Taxi Availability Standards, taxi operators
may find themselves having to offer more competitive
taxi rental rates or better benefits to would-be drivers
which may likely eat into their operating profits.
5.5 Competitive Rivalry

Figure 7. Diesel monthly prices (SGD per gallon)
Source: IndexMundi

Other suppliers to the public transport industry include
vehicle manufacturers. Common brands of bus vehicles
used in Singapore include Mercedes-Benz, Volvo,
Leyland, Scania and MAN60. In terms of PTOs’ elasticity of
demand for bus vehicle, it is considered to be relatively
flat, since there are many manufacturers around the
world which are able to offer similar models, although it
is recognized that there is still a need for vehicle design
standardization so as to save costs in maintenance and
driver training; as well as ease of replacement for vehicle
parts. Within the rail sector, although there is a limited
number of manufacturers who are able to provide heavyduty vehicle parts for trains, local PTOs have little to be
worried about as far as supply is concerned since a
tender system is used to get train manufacturers to bid
for a contract to provide the trains61.
Taxi sector
With the introduction of private car hire services such as
UberX, taxi operators face competition not just for
customers but for manpower as well.
UberX drivers only have to be registered with the firm
and own an insured, functional car to ferry passengers
around, while taxi drivers for companies like CDG would
have had to undergo health check-ups and interviews.
With UberX, drivers would not be subjected to the
various regulations that official taxi operators have to
adhere to. UberX also provides car leasing for drivers to
offer private car hire services, much like a regular taxi
company, but at much cheaper rates than that offered by
taxi companies like CDG or SMRT, since these are
regulated and have reputation costs to consider. For
example, the rental cost for a Hyundai Sonata taxi under
CDG’s Comfort Cabs would set a driver back S$105 per

Bus and Rail sectors
While the bus industry is currently a duopoly between
SBS (under CDG) and SMRT, rivalry has been low since
each operator has its own routes to run which do not
duplicate each other. Moreover, they are unable to
compete on price since fares for public scheduled bus
and rail operations are controlled by the PTC.
On the other hand, with the imminent implementation of
the GCM in 2016, one of its main objectives being to
lower entry barriers, active competition is expected.
Market players, which may likely include foreign
operators on top of local firms, will now have to compete
directly with each other for market share under the new
bidding system for bus service routes.
Similarly, the rail sector duopoly is set to dissolve under
the NRFF, although its impact will not be felt until 2016.
Upon full implementation of the new framework, train
operators will be up against more competition to bid for
rail lines, based on their service quality and standards.
Taxi sector
Already relatively saturated with 6 taxi companies, the
dominant market player has clearly been CDG with its
Comfort Cabs and CityCabs, owning a lion’s share of the
market at 62%. As such, other players look to CDG to
price their services. For example, in 2008, CDG
introduced a $0.30 fuel surcharge which was shortly
followed by the other players except Prime Taxi,
although CDG later removed the surcharge citing
declining diesel prices and a weak economy64. As such,
price competition between the operators is low.
However, the operators still have to attract drivers to
join them such as by offering better benefits or even
lower rental. This is made tougher with the appearance
of private hire apps jockeying for drivers.

Public Transport Industry (Singapore)

6. Industry Risks
6.1 Cost structure

Combined operating expenses (CDG & SMRT)
FY10 – FY13 (S$m)

High fixed costs; substantial variable costs
Much of the costs PTOs face in the industry come from
expenditure on infrastructure, such as bus interchanges, rail
stations and tracks, and operating assets, such as trains and
buses. The other main cost component is the costs of operations,
such as fuel and wage costs, and equipment maintenance. The
general business model for any PTO is therefore one of high
fixed costs with lower, but still substantial, variable costs.
In recent years, PTOs have been faced with rapidly rising
operating costs (fig. 8): incumbent operators CDG and SMRT
have both seen increases in labour costs, while CDG faced higher
fuel cost pressure, likely due to its larger fleets of taxis and
Moreover, in order to cope with the surging demand for public
transport, they have also had to expand their fleets, adding to
their overall capital expenditure and depreciation and
amortization costs, eating into operating profits. In fact, both
incumbent operators have been incurring losses in their public
scheduled bus operations. This is also largely due to the fact that fares for
public scheduled bus services are managed and controlled by the PTC
and fare hikes are curbed accordingly to ensure affordability for
commuters. Any fare hike would therefore not be completely in line with
operators’ burgeoning running costs.
Due to swelling operating costs and fare revenue deficit,
profitability has been low to negative for PTOs’ public
scheduled transport operations. Despite continuous
uptick in ridership for both bus and rail services, CDG
and SMRT have been facing significant operating losses.
CDG’s public schedule bus operations under SBS have
incurred operating losses since FY1165, starting with a
loss of S$6 million, a plunge of 20.5% from the previous
year. While losses since have not been as drastic, they
have still yet to reverse in trend, with a further drop of
7.4% in FY1266 and a dip of 1.1% in FY1367. SBS’s
Downtown Line is still suffering start-up losses, although
it is not expected to be material in the long run after
Phases 2 & 3 of the line have been completed. SMRT has
also recently reported a substantial loss of S$9 million in
their bus and rail businesses68.
Despite a relatively bleak current situation within the
local fare businesses, PTOs have managed to remain
profitable due to extensive diversification of their
business models as well as continuous strategic
expansions and acquisitions overseas. For example,

Figure 8. Operating costs have been on the rise for
CDG and SMRT, the 2 main PTOs in Singapore. A bulk
of their operating costs comes from the increase in
total staff wages.
Sources: CDG & SMRT Financial Results FY10-FY13

overseas contributions from bus and taxi operations in
Australia, China and the UK have contributed
significantly to CDG’s total Group operating profit in
recent years, with 1Q14 seeing overseas operating profit
accounting for more than 50% of total operating profit
for the first time69. CDG is expected to continue its strong
overall growth driven by its various other businesses,
both locally and internationally. Similarly, SMRT has also
continued to see robust growth in its other business
segments, with an upward trend of revenues from rental
and advertising70,71,72. It is expected that PTOs’ business
segments outside of fare operations (public bus and rail)
will continue to buoy industry players’ growth and
Moreover, with the implementation of the GCM in the
bus sector announced, as well as progress on the NRFF
to be expected, PTOs can look forward to a new business
model with much lower fixed costs while also relieving
some operating cost pressures, since the Government
would now own all operating assets and operators can
include all necessary operating costs into their bid for

6.2 Highly regulated environment
The public transport industry in Singapore is currently
managed and regulated by 2 independent statutory
bodies under the Ministry of Transport (MOT): the Land
Transport Authority (LTA) and the Public Transport
Council (PTC).
The LTA ensures that public transport industry runs
smoothly and efficiently and its policies aim to make
public transport a choice mode of transport for citizens,
which means applying a more passenger-centered
approach to the public transport model. This in turn
means continuously setting higher standards for PTOs to
cater to commuters’ needs and demands. It also took on
the role of central bus network planner in 2009, so that
PTOs no longer have autonomy over route and
expansion plans.
The LTA also sets standards (QoS) that taxi operators
have to meet in order to continue their operational
licenses. These standards include an 80% taxi
availability standard, set to increase to 85% in 2015; as
well as at least an 80% cater rate to match taxis and

necessary to meet their operating expenses. However,
the extent of any fare hike is limited using the following
Fare Adjustment Cap model recommended by the Fare
Review Mechanism Committee (FRMC)74:

Furthermore, due to a roll-over method, it is not
guaranteed that a recommendation for a fare increase
using the above formula would be implemented in (fig.
10). Instead, part of the recommended portion will be
rolled over to the next period for further review.
Disparity between allowed fare cap & actual fare change

Already facing rising operating expenses, such tight
regulatory control and high penalties for non-compliance
impose further pressure on PTOs to invest even more in
manpower and the latest infrastructure while trying to
manage their burgeoning operating costs.
The PTC is responsible for
the regulation of bus and rail
fare, a crucial and politically
important balancing act
profitability and quality (fig.
9). PTC also regulates public
Figure 9. The Public Transport Trilemma
issue and make
Source: LKYSPP
amendments to
bus service licenses, and advises the MOT on areas such
as conditions on licensees and penalties on noncomplying licensees.
Not permitted to raise fares on their own, PTOs have to
apply to the PTC for any fare increases they deem

Figure 10. Actual fare change granted has been less than
the allowed fare cap.
Source: FRMC 2013

Nevertheless, a more positive outlook for both overall
industry profits and growth potential is expected once
the new contracting models set in within the bus and rail
sectors, since fare revenue risk would now be assumed
by the Government.

6.3 Competition
As alluded to substantially throughout the report, a significant risk that market players will face in the industry is the
competition set to be introduced upon the implementation of the new bus and rail operating models, an effort by the
Government to lower entry barriers to attract more firms so as to drive all players to improve and maintain their service
However, such contracting models will also significantly lower fixed costs, freeing up cashflows to invest in resources to
improve and maintain quality services. Furthermore, with the incumbent firms’ firm standing in the industry, combined
with their consummate knowledge and experience as well as their substantial fleet size, we do not expect a significant
impact on market share in the short or intermediate run. In the long term, we foresee firms taking advantage of economies
of scale of their infrastructure as well as the fact that public transport will only become more indispensable in time to

7. Critical Success Factors
Despite its risks, we foresee that the public’s inelasticity of demand for public transport services will provide opportunities
for the industry to come to grips with the new business environment and adapt to ever-changing needs of the citizens as
well as other economic circumstances. Several key factors will help the industry continue its success, even as it is set to
undergo significant transformation.
7.1 Sustained demand and growth
Over the past 10 years, public transport ridership has been on an upward
trend, with the exception of 2005 and 2009, when bus ridership
dipped (fig. 11).
Growing population
With the Singapore population projected to increase to 6.9 million
by 2030 and half the current population already using the public
transport system every day, it is expected that commuter
ridership, especially for train services, will continue to stay in line
with trends and grow in tandem with the surge in population (fig.

Public bus & rail ridership 2004 – 2013

Public transport ridership with population
2007 - 2012

Figure 11. Average daily bus & MRT ridership has been
on a near-constant uptrend over the past decade.
Source: LTA

Figure 12. The demand for public transport will only
continue to grow together with the Singapore population.
Source: Land Transport Master Plan 2013


Rising tourist numbers
Just in the last year alone, there were more than 15 million
visitor arrivals, up from about 14.5 million the previous
year (fig. 13). With train and bus rides becoming
increasingly popular among tourists as a way to explore
the city over taxi rides, we foresee further demand for
service routes into the city area as well as places of
Increase in foreign workforce
A growing foreign workforce, a considerable proportion of
which are domestic or construction workers, will also
increase demand for more public bus services (fig. 14),
especially into industrial areas.

Tourist arrivals in Singapore (2010 – 2013)



Figure 13. An uptrend of tourist arrivals from 2010 to 2013.
Source: Singapore Tourism Board

Foreign workforce in Singapore 2009 - 2013
Figure 14. Singapore’s foreign workforce continues to
grow, with an increase of more than 25% between 2009
and 2013.
Source: Ministry of Manpower


7.2 Government initiatives
While the regulatory environment could indeed be
detrimental to individual firms in the public transport
industry cost-wise, Government initiatives in place to
actively promote public transport as the choice mode of
travel, will be able to propel the industry and provide
other opportunities for firms to thrive.
‘People-oriented’ approach
In order to ensure that passengers continue to prefer
public transport over private transport, measures are
constantly being taken to improve the quality of service
and comfort of passengers during their commute. Such
measures include keeping fares affordable for everyone,
including the poor, needy and old. For example, during
the economic recession in 2009, the PTC implemented a
fare reduction package to lower fares75. Low-income
groups also received concessions and vouchers from
Government schemes and vouchers. Students and the
elderly enjoy cheaper rates of travelling on public
transport. On top of that, to ensure that public transport
remains accessible to everyone, transport infrastructure
such as buses, trains and stations, are all required to be
barrier-free for the benefit of the old and disabled76.
Addressing social concerns
In view of public dissatisfaction with problems such as
congestion due to the growing population and vehicle
infrastructure, significant steps have been made to
expand and enhance the public transport network and
overall capacity so as to sustain increase in demand, and
to improve efficiency and comfort for passengers.
To address concerns such as congestion and
overcrowding on buses, bus lanes have been extended
from 120km to 150km77 so as to allow them more
priority on roads to ensure smoother and faster bus
journeys for passengers. In progress for more than 2
years now, the BSEP has also introduced more than 30
new bus routes and enhanced more than 150 existing
bus services by increasing service frequencies or adding
higher-capacity buses along heavily-used routes. For
example, at least 4 in 5 bus services come at 10-minute
intervals or less now78. Under continuous review and
active monitoring, bus route management has improved:
services have been rerouted or extended to serve more
passengers wherever necessary79,80.
Works to expand the current rail network are also well
underway: 2 more lines will be built and extensions
added to existing lines to relieve pressure off
overcrowded and heavily-utilized existing train lines.
This will enable passengers’ demand for public transport
to be spread out more evenly. Furthermore, under
scrutiny to upgrade and regularly maintain

infrastructure, PTOs are now required to track and
report more indicators for service and infrastructure
quality. Such measures aim to boost public confidence in
the public transport sector, ensuring its sustainability in
the long run.
Private car ownership
In a city as dense as Singapore, it would be a tremendous
strain on the road network if cars were the main mode of
transport. With the island having only 716.1km2 in area
and 12% of land space for roads, it would be more
practical to ply roads with public transport vehicles with
much higher capacity (130 passengers per double-deck
bus81; 1,920 per standard 6-carriage MRT train82) than a
car, which can only accommodate 5 to 7 people at the
Car ownership is discouraged through punitive
measures imposed on car owners (would-be or existing).
Engine Capacity (EC) in cc
EC ≤ 600
600 ≤ EC ≤ 1,000
1,000 ≤ EC ≤ 1,600
1600 < EC ≤ 3,000
EC > 3,000

(from 1 July 2008)
S$200 x 0.782
(S$200 + 0.125 x (EC – 600))
x 0.782
(S$250 + 0.375 (EC – 1,000))
x 0.782
(S$475 + 0.75 (EC – 1,600)) x
(S$1,525 + 1(EC- 3,000)) x

Table 3. Road tax structure for cars in Singapore
Source: LTA

In order to purchase a car, the driver would have to first
bid for the right to own one. Since supply of cars are
controlled by the Government, demand far outweighs
supply, so such bids (COEs) are driven up in price,
making it very costly to own a car. It is nearly impossible
for most citizens with average incomes to purchase a car
without a bank loan, yet car loans have been shrinking in
recent years.
People who already own cars have to renew their COEs
every decade, and pay a road tax based on the capacity of
the car’s engine (Table 3) as well as congestion charges
(ERP) at priced roads during peak hours.
With private transport priced out of most Singaporeans’
range and substantial efforts by the Government to
improve the public transport network, not only is the
public transport industry not likely to see any decline
soon, it is expected to expand and become an even more
integrated part of society.

7.3 Well-integrated transport network
With an extensive network spanning the island and
numerous transport hubs where passengers can easily
interchange between bus and rail services, the public
transport network in Singapore is well-integrated and
coordinated. Continued efforts to integrate services
across modes have allowed commuters can enjoy better
connectivity and experience more seamless travel,
lessening the haphazardness and haste of transferring
between several destination points during peak periods.

during their journey. In 2008, the PublicTransport@SG84
website was launched to help commuters plan their
journeys, with interactive maps covering bus and rail
trips across the island. The site offers a simple calculator
to compute fares, so that commuters may plan their
budget for their transportation needs. MyTransport.SG, a
portal that consolidates information and eServices for all
land transport users, including motorists and cyclists,
was launched in 201185. Other mobile apps from external
providers such as SG Buses also provide information on
real-time bus arrival times, making bus travel more
convenient and seamless.

Distance fares
The introduction of distance fares83 in 2010 aimed to
provide a more even fare structure based on distance
travelled regardless of the number of valid transfers
made. With distance fares, commuters pay the same fare
whether they travel directly to their destination, or make
transfers during the journey, so that commuters have the
flexibility now to decide on the best route to reach their
destination without having to worry about cost.

7.4 Dedicated efforts to enhance transport network
A major priority for both the Government and PTOs is to
continuously improve and enhance the public transport
system as required to keep up with commuters’
Transportation Society Singapore86 was therefore
formed in 2001, bringing together academics, public and
private organisations, among others, to exchange ideas
and information on intelligent transportation systems,
ensuring that the public transport system will always be
evolving to suit commuters’ needs.

Connectivity through information technology
Providing intermodal journey information is becoming
easier with smartphone apps, especially when real time
service information is embedded. It ensures that
commuters can make informed decisions before and
8. Market Trends & Outlook

As change is sweeping through the public transport industry, we can see that passengers are no longer passively moving
from one destination point to another: instead, they are now customers with higher expectations of service levels and
travel experience: wanting more convenience; more seamless journeys across different modes of transport. Furthermore,
with rapid urbanization, there is a need for enhanced and ‘smarter’ public transportation so as to increase efficiency.
Technological innovations are therefore both driving the demand for better service and enabling industry players to
actively be part of the change.
8.1 Contracting models
The idea of contractual models for public
transport services is not a new one. In fact,
Singapore’s new bus operating model is closely
modeled after those in Australia and London,
where they have been successfully implemented.
In London, waiting times have been reduced
substantially (fig. 15) and commuters are more
satisfied with the public transport. It is hoped that
Singapore will experience the same result.
We foresee that as Government authorities or
regulatory bodies around the world come under
increasing pressure from citizens to tighten up
standards for public transport efficiency and
comfort, while taking into account rapidly rising
operating costs, the global public transport
industry will shift towards more contractual
business models to keep standards up while
keeping costs contained, creating a more level
playing field worldwide by creating more
opportunities for local industry players to expand


Waiting time for high-frequency buses in London

Figure 15. Waiting times for high-frequency buses in
London have dropped drastically, much to the delight of
Source: TODAYOnline

Financial Year

8.2 Redefining business models
Geographical diversification
PTOs are increasingly going beyond local borders to
provide transportation outside their regions and
countries. Singapore’s own CDG and SMRT have both
successfully expanded their operations abroad, with CDG
having a wide network of public transport operations in
Australia, UK and China, amongst other countries87; and
SMRT owning a large stake in Shenzhen ZONA
Transportation Group88. Britain’s FirstGroup has
transport networks in diversified geographical locations
as Denmark, Canada and United States; while France’s
Transdev has operations in 21 countries over 5
continents; and Australia’s Transit Systems has a
substantial presence in Britain.
With overseas expansion, PTOs will be able to capitalize
on their unique abilities and strengths and broaden their
global exposure and presence.
Diversifying business models
PTOs have also begun to diversify their business
operations to include a wider range of operations to
cater to commuters’ various ever-changing demand. For
example, CDG has expanded their local operations to
include important ancillary services in the public
transport sector such as engineering, drivers’ learning
centres and vehicle inspection, capitalizing on their
experience and expertise to widen their scope of
business89; while SMRT has started to offer consultancy
Another fast-growing trend in the industry is integrating
marketing and retail within the transport network,
enhancing the experience of the everyday commuter. For
commuters who make transfers, interchanges and
stations are increasingly becoming mini-retail centres, or
lifestyle hubs, where commuters can shop for amenities
or do quick banking transactions, or have a meal before
boarding the train or bus to their next destination,
increasing the convenience of taking public transport. In
Singapore, examples of such hubs are Ang Mo Kio Hub,
NEX at Serangoon and Clementi Hub91. Local incumbent
SMRT generates a major portion of its operating income
from retail and rental revenue92.

8.3 Intelligent transport systems
In the age of big data, data analytics will also play a key
role in helping public transport systems meet everchanging demands of passengers in the face of rising
costs, including costs to meet higher environmental
For instance, a Smart Mobility93 plan was recently
unveiled for the Singapore public transport system,
featuring a future with driverless buses and smart cars.
Benefits will include better management of congestion
and more flexibility for commuters. In the meantime,
FASTER (Fusion AnalyticS for public Transport
Emergency Response), the two-year project by LTA,
SMRT, IBM and Starhub, will leverage on the vast
amount of data collected provided by contactless cards
known as EZ-Link cards, used during passenger trips to
improve local public transport systems.
Analysis of usage data will enable transport providers as
well as Government regulatory bodies to understand
individual movements of passengers and tailor their
offerings accordingly. Social media platforms such as
Twitter and Facebook will also be able to provide
valuable insights into commuters’ needs and wants, and
allow transport providers to leverage on this
information to shape their services and overall network.
Through performance monitoring and network analysis,
transport operators will be able to have a better
understanding of common issues and constraints within
the system which will thus enable them to optimize the
utilization of transport infrastructure in the long run.
8.4 Green technology
Transport is a major source of carbon dioxide and other
greenhouse gases. With air pollution becoming a major
problem in major cities such (e.g. Beijing 94 and Paris95),
there has been increasing pressure on governments,
including in Singapore, to ensure that public transport
systems become more eco-friendly if they are to remain
sustainable in the long term. Coupled with rising fuel
prices, there is also a need for transport operators to
invest in more energy-efficient methods so as to limit
operating costs in the long term.
Energy-efficient vehicles, including railcars, are
gradually being introduced in an effort to move the local
public transport system into a more environmentallysustainable model. Taxis and public buses in Singapore
are being replaced with fuel-efficient and reducedemissions hybrid models such as SMRT’s Prius Hybrids
taxis and SBS’s low-emission buses96.

9. Conclusion

“If public transport is
a religion, Singapore
must be a holy place.”

Rising costs, rapidly evolving consumer behaviour and expections,
as well as technology changes are some of the challenges which are
redefining the public transport sector in Singapore. Local public
transport operators will find themselves having to step up their
efforts for innovation to bring costs down while increasing service
standards and diversifying their business models viably to meet
Mr Hans Rat, Secretary-General, Union Internationale de
changing demands. Nevertheless, such changes will be a positive
impact on the overall industry, bringing it to the next level, with
smarter technology and greater integration into peoples’ lives.
Furthermore, with continued efforts by the Singapore Government to push public transport as the choice mode of travel,
we are confident that not only is decline not on the cards for the industry, it will continue to grow and flourish, and will be
well worth an investment in it.

Cover image: Wikipedia
Source for Cover Quote: NYTimes
Bus Industry Overhaul: ChannelNewsAsia
Transition to Government contracting model: LTA Facebook
Bus Service Enhancement Programme Progress: 2012, 2013, 2014
What commuters can expect in the coming years: URA

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