Defending a bus fare hike which affects millions of low-income people risks earning you a frown. But allow me to explain why the bus fare increase in April was necessary and – more importantly – what else needs to be done to protect consumers with better bus quality, safety and services.
First, the fares.
The April bus fare increase has triggered a loud public outcry for a good reason. The passengers’ complaints about poor services and lack of safety are definitely valid. But we cannot deny that those poor services are directly linked to low bus fares.
True, the government needs to regulate the fares of basic public transportation. But when the fares have been kept too low for political reasons for far too long, private bus companies which do not receive state subsidies have to struggle financially. When bus companies suffer, so do the bus services, and the passengers.
Our challenge is to strike a balance between the regulations and the bus fare rates to serve the passengers with quality services.
Up until April, the fares had been based on only one factor – the oil prices. During 2006-2007, the fares went up following the hike in diesel prices. In 2008, the fares came down following lower oil prices. The fares were then kept the same for the next six years until 2014, then they were increased again in 2015 following steadily rising petrol and NGV prices.
This is where the problem lies.
Using oil prices as the only factor in determining bus fares omits other investment costs in operating bus companies. They include salaries (31%), petrol (27%), vehicles (19%) and other administrative and management costs (23%).
The revenues of private bus companies come mainly from bus fares. When the revenues cannot keep up with the expenses, they need to operate on a shoestring and struggle to stay in the business by sacrificing service quality and passenger safety.
Low wages and unfair working conditions hit the drivers and ticket collectors hard. This leads to speeding and reckless driving because the more trips they make and the more bus tickets sold, the more commission money they receive each day. Passengers and public safety suffer as a result.
We should look at how other cities regulate their bus systems and make the bus fare rates fair to both the operators and the passengers. Singapore and Hong Kong are cases in point.
Their formulas to calculate the bus fare rates have one thing in common. They are not based on energy costs alone but include all bus operation costs and key economic indexes on basic consumption, labour, energy, and service productivity. They have also set up a system to review the bus fare rates every year.
This bus fare review system enables bus operators to have enough money to invest for better bus quality and services. As a result, more than 50% of the total trips in Singapore and Hong Kong routinely use buses as their main public transportation.
The new bus fare rates for the Bangkok metropolitan area which came into effect last April used almost the same formula as in Singapore and Hong Kong. A good start, yet we should not overlook the need to help the urban poor who rely on buses to commute.
At present, the poor who have registered with the government receive a 500-baht monthly subsidy for public transportation through their state welfare cards. However, research by Thailand Development Research Institute (TDRI) on the public transportation expenses of lowincome groups, shows that a worker spends at least 24 baht per day for 20 working days each month to commute by buses. It’s clear the subsidies are not enough.
There are ways to help the needy and to improve the quality of the public bus systems.
For low-income groups, the government should increase their subsidies for public transportation from 500 baht to at least 700 baht per month to cover the fare hike. Having more money will also enable them to use different types of bus services available.
For fairer and more systematic fare adjustments, the government should set up a committee to review the fares according to real investment costs and key economic indexes. This review should be done every year. The committee should also set up a comprehensive data system to facilitate the long-term planning of fair pricing.
For passenger satisfaction, this committee should regularly review the efficiency of each bus line, the number of passengers serviced, and the real demands on the ground in order to adjust the bus routes, trip frequency, and the number of vehicles accordingly. This regular review will help avoid overlapping routes, create more efficient bus networks, and serve the passengers more efficiently.
The performances of both public and private bus operators should also be evaluated regularly. This will drive bus operators to adjust their routes and improve their services for consumer satisfaction in order to keep their bus routes and stay in business.
Using a comprehensive bus fare formula is a step in the right direction. But more needs to be done. The urban poor should not be left behind. Meanwhile, the government must ensure that the bus operators improve their service quality and safety after the fare hike.
The latest fare increase is not about siding with bus operators. It is not about fleecing the urban poor. It is a move to enable cash-strapped bus companies to improve bus quality and services so more people turn to buses to commute in Bangkok.
At present, buses are mainly for low-income groups because of their poor services. This is wrong.
The notorious Bangkok traffic gridlock won’t improve unless people leave their cars to use buses and other public transportation systems to commute. But people won’t use buses unless the bus networks, services, and safety improve.
Fair pricing is key. It will help improve the services of the bus system so it becomes a public transport of choice for all groups, not only the poor. The bus fare increase in April will help make it happen. That’s why it’s necessary.
I rest my case.
Kittiya Yisthanichakul is a researcher at the Thailand Development Research Institute. Policy analyses from the TDRI appear in the Bangkok Post on alternate Wednesdays.
First Published: Bangkok Post on Wednesday, June 26, 2019