Public transportation fare hikes

People were upset when our transport agencies favored the requested fare rate increases asked by the LRT and MRT operators in Manila, purportedly to recover their losses during the pandemic. You’d begin to wonder why, when train fares were slashed in Germany, Victoria in Australia, Ireland, and Greece during the pandemic. There was even a Great British Rail Sale! Train fares also fell in Spain, Portugal, Croatia, Switzerland, and Austria. And this became free in Luxembourg in 2020!

Now this is not to say that fares are insulated from inflation, or that COVID-19 did not reduce public transportation trips. But the train fare reductions in these other countries prove that governments do not necessarily resort to hiking fares when ridership slows down. In the first place, countries provide public transportation primarily for their tremendous economic benefits, not to make a profit or recover expenses. Public transportation (PT) is extremely necessary for both public convenience and economic development, and their economic viability is extraordinary. Normally, as can be gleaned from other countries, PT fares are shielded from inflationary pressures. Even from worldwide pandemics.

So why are our government agencies expressly pliant to LRTA, MRTC, and LRMC’s demands? Ah, most probably on how the financing of these companies were structured in relation to the government, especially for the privately-run ones. When the government, or the people in it zero in on the financial regime of public-private-partnership (PPP) agreements, then fare rates become prey to the financial roller-coaster. Public transportation is extraordinarily important to the national economy such that when the former’s operation is threatened, the whole country is in trouble. Thus, the public sector should treat PT with the economy in mind, and not with profitability. In many cases, subsidies are resorted to.

While many public transportation systems are not subsidized, some, especially rail, are. Some say all rail systems in the world are subsidized, with Hong Kong’s being the purported exception. HK’s case may be true but only because their contractual structures are directly linked to land rent. Because of differences, one PT system might subsidize another, and even in a single PT system itself, say the LRT’s or MRT-3, certain sections will likewise subsidize others. Ridership will always be uneven in a rail line with certain segments between stations having much more passengers (usually the center sections) than others (near the ends).

Indeed, fare collection did dive during the pandemic, but this should not be automatically a cause for fare rate increase. Why, after these companies recover those losses, will the government roll back the fares? In our dreams! Let’s ask NEDA and the PPP Center to number-crunch first and explore other possibilities. On the other hand, if the intent is to use fare increase to fund more PT improvements, by all means, let’s do it. More PT means more economic benefits which will justify commuter’s contribution through these increases. But not to enrich the operators! Remember, everybody was affected by the pandemic. If the government gives in, all the other private companies the government has partnered with will ask for similar concessions! We might be opening up Pandora's Box.