Tuesday, May 17, 2005

Public transport fares debate 

Christopher Tan adds his voice to the debate over the proposed increase in public transport fares. Excerpt from The Straits Times:

All too often, debate over proposed increases in public transport fares centres on the profitability of transport companies. The consumer voice almost always argues that if transport companies are making good profits, they should not raise fares.

That logic is flawed. If an operator that makes $50 million a year charges an average 90 cents per trip, how much should it charge if it makes $100 million a year? 45 cents? Surely not. Or what if it makes $1 million a year? Or incurs a loss of $10 million, for that matter?

Profits and fares should be delinked. Instead, transport operators should be allowed to command prices the way most other purveyors of goods and services are — by the quality of their goods and services.
His article is largely on the right track, although he oversimplifies things when he says that profits and fares should be delinked. Of course they should be linked — just not in the simplistic way that some people think.

Most people whose views have been published in the mainstream media have argued on the basis of broad principles — service and affordability should be considered, profits at the transport companies should not be excessive, an increase should be implemented at a more opportune time.

But what the debate really needs are specifics — specific fare revision formula, specific benchmarks. These are in fact already in place, they implicitly take all the above factors broadly into consideration, and they guide the fare revision process. Those who want to debate on this issue need to debate these specifics, not the broad principles.


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