Singapore to restructure public bus sector through shift to 'contract' model

Singapore’s government will contract bus operators to run bus services through a competitive tendering process as part of a restructuring of the public bus sector, the Land Transport Authority (LTA) said on Wednesday.

In a press release, the agency said that starting from the second half of this year a “government contracting model” would be adopted that should make public bus services more responsive to changes in ridership and commuter needs.

The change should also inject more competition in the industry and thereby raise service levels for commuters over time, LTA said.

“Potentially, more bus operating companies, including foreign ones, can enter our market and raise the level of competition,” Transport Minister Lui Tuck Yew explained in an online note.

As part of the new bus industry model, the government will own all bus infrastructure such as depots, as well as operating assets such as buses and the fleet management system.

LTA will determine the bus services to be provided and the service standards, and bus operators will bid for the right to operate the services. The operators will be paid fees for operating the services, while fare revenue will be retained by the government.

The adoption of the model will be phased in gradually. Bus services will be bundled into twelve bus packages with about 300-500 buses each. LTA will tender out three packages of bus services, starting from the second half of 2014 for the first package, for implementation from the second half of 2016.

The contracts will be for five years and can be extended by another two years. The three packages will comprise about 20 per cent of existing buses.

The other nine bus packages will continue to be operated by Singapore two current bus operators, SMRT and SBS Transit.

LTA said it would negotiate with the incumbent operators to run the nine packages under the contracting model for durations of about five years after their bus service operating licences expire at the end of August in 2016.

With the shift, the government also intends to raise bus services levels so that an estimated 45 per cent of bus services will have shorter intervals during peak periods, LTA said.

Under the current privatised industry model, it is more difficult to increase capacity and improve service standards as responsively, as operators may not run services if these are assessed not to be profitable, it noted.