Allow bus operators leeway

UNDER the Urban Public Transport National Key Result Area (UPT NKRA), the Interim Stage Bus Support Fund (ISBSF) was set up in January 2012 with an allocation of RM400mil to help stage bus operators run non-profitable routes for the benefit of the rakyat. Funding will continue in 2016 but the bus companies involved have only received payment for January.

The Government revised the 2016 Budget in January, cutting down RM4bil in operating expenditure and RM5bil in development expenditure. This month, the Land Public Transport Commission (SPAD) disclosed that the total allocation for the ISBSF is RM661.7mil to date. With the cut in the budget, should this subsidy be continued?

The answer is yes, as it would cost the Government more to run bus companies. For example, Rapid Bus incurs RM200mil losses annually.

However, the ISBSF was meant as an interim measure until it is substituted by the Stage Bus Services Transformation (SBST) programme, also known as MyBas.

Under the SBST programme, the Government is expected to spend about RM500mil in 2016, rising to RM800mil, RM1.3bil and RM1.9bil from 2017 to 2019. From 2020 onwards, it would spend about RM2.7bil annually.

But these forecasts were made before oil prices nosedived. With Petronas being the single largest source of revenue for the Government, the initial targets set for the ISBSF and SBST are no longer tenable under the regime of low oil prices. Ironically, wellrun bus companies do not need the ISBSF subsidy or participate in SBST.

SPAD, which became operational in January 2011, announced fare hikes only for taxis and express buses in 2015. Budget taxi fares were increased from 87 sen per km to RM1.25 per km, and RM17.14 per hour to RM25 per hour, a jump of 44% and 46% respectively. Express bus fares were raised from 9.3 sen per km to 11.4 sen per km, while stage buses remained at 94 sen for the first 2km and 9.4 sen for subsequent kilometres.

As such, based on the 2009 rates, the maximum fares stage bus operators can charge are RM3.70, RM4.50 and RM5.45 for 32km, 40km and 50km respectively.

Fares for travelling within the four zones in Kuala Lumpur are RM1, RM1.90, RM2.50 and RM3.10 respectively.

Before the Bus Network Revamp (BNR) was introduced by SPAD in December 2015, there were too many bus companies competing on the same routes, resulting in other areas being underserved. Operators competed by lowering fares.

For example, a bus company charged only RM2 instead of RM3.70 for the 32km trip to Rawang from Kuala Lumpur. After the implementation of the BNR, the operator wanted to raise the fare to RM3.10 by applying the maximum allowed within Kuala Lumpur, although Rawang is well inside Selangor. Although the operator is legally allowed to raise fares within the limit, doing so will incur the wrath of government officials tasked with achieving Key Performance Indicators (KPIs) under the NKRA.

So, instead of getting the blessing to charge either RM3.70 or RM3.10, the company was asked to introduce monthly passes and give away 30% discount off the RM2 fare.

At RM1.40 for 32km, it works out to 4.4 sen per km. At this rate, the fares collected from 28 passengers combined are less than a budget taxi rate of RM1.25 per km. Arm-twisting bus operators to charge unreasonably low fares would lead to the demise of their business.

What is the point of giving life support to operators in the form of ISBSF but bleed them to death by coercing them to charge RM1.40 when RM3.70 has been allowed since 2009?

Bus operators suffer untold miseries as subsidy was reduced with the introduction of the BNR and payments for February onwards are yet to be released.

Introducing monthly passes incur administrative costs so such an exercise should be undertaken by the Government, allowing for seamless payment for all public transport as well.

Government officials should not micromanage the bus industry and flawed fundamentals should not be glossed over with impressive KPIs.