Tuesday, 12 July 2011

SMRT and SBS to increase fares.....again

For the whole of 2009, the Hong Kong MTR made US$77 million from advertising revenues. Because this was a significant drop from the previous year, probably due to the '08 financial crisis, the management promised to go all out to bring in additional ad dollars.
Check out some of their digital campaigns here:



If you've been to Kuala Lumpur recently, you will see lively advertising in their metro stations.




Contrast this with SMRT. The billboards lining Tanjong Pagar and Raffles Place stations are mostly empty. These are probably the stations with highest human traffic as they are located in the heart of our business district.
And the economy surely can't be in recession when State Media reported today that Mastercard claimed there was a 49% rise in spending on their cards in the first month of the Great Singapore Sale compared to last year.

Train operators rely on advertising revenue to boost earnings in bad times and to combat rising costs of operation among other things.
That naturally means they need a well trained and motivated sales force to solicit advertising business.
And Singapore is the home to many consumer goods HQ so there can't be a lack of corporate targets.

So why doesn't SMRT (and SBS) appear worried at the lack of ad dollars?

Because they can increase their fares any time they want.
It was reported today that both SMRT and SBS are seeking the maximum fare increase. What gall!
Unlike many cash strapped operators in other countries, SMRT's FY11 revenues grew y-o-y to reach nearly 1 billion dollars.
You can see from the table below that with the exception of FY 2009 and 2010, growth in car kilometres operated did not keep pace with the growth in ridership.
That means SMRT did not adequately increase service levels despite the surge in Singapore's resident population over the last five years.
This would explain why trains are overcrowded, air-conditioning faulty and the numerous breakdowns.

Yet they have the cheek to consistently seek fare increases because they just be bothered to look for alternative sources of revenue like ad dollars or increase productivity?


I wonder what the Public Transport Council (PTC) has to say about the latest request for adjustments.
Since PTC is a statutory board under the Ministry of Transport, Lui Tuck Yew and PAP must also be held responsible if the PTC approves the latest round of profiteering by our public transport operators.

But there is nothing out of the ordinary here. Prices and fares of most public services go up after Elections. Thanks to the 60% daft Singaporeans, we should brace ourselves from yet another vicious cycle of price hikes.

In any case, SMRT has lots to learn from a truly world class system--- The Seoul Metro.

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