D2 SATURDAY INSIGHT SATURDAY, JUNE 14, 2014 SATURDAY, JUNE 14, 2014 INSIGHT SATURDAY D3 OPERATING Genesis of major shift in PUBLIC BUSES: Singapore’s bus system

THE idea of a bus contracting sys- port, told Insight that several fac- was ready to run services, Mr Yeo sites in developed areas. This Lessons tem came up as early as 2006, tors held back the implementation said. “Because of the rail capacity move is to ensure depots would when the Government embarked of the new model. issue, we needed to introduce al- not be located in areas where bus- on a thorough review of the land First, the LTA introduced dis- ternatives quickly.” es had to ply long distances just to transport sector. tance-based fares in 2010 to elimi- Discussions on competition “re- get on their routes. It engaged international con- nate transfer penalties and ally sped up” while the $1.1 billion This major shift in adopting a sultant Booz Allen Hamilton to opened the Circle Line in stages Bus Service Enhancement Pro- part-nationalised model marks study how it could improve public from 2009 to 2011. gramme (BSEP) was being imple- the latest evolution in Singapore’s transport; and one of the sugges- It had expected demand for cer- mented, he said. As part of the bus system, which in the 1960s from tions was for a system where bus- tain bus services to change as a re- BSEP, the LTA started contract- had 11 unregulated private bus es bid for routes to run. sult, and wanted to wait for de- ing out bus routes to private opera- companies that controlled differ- The consultant was not the on- mand patterns to stabilise before tors last year, in a prelude to the ent territories. ly one who thought Singapore calling any tenders, he said. contracting model. Those companies merged into should adopt this model, which Then, when grouses about over- Last November, it engaged con- three firms in 1970 under a direc- has proven to be successful in cit- crowding on trains and a spate of sultant CH2M Hill to make a con- tive from the Government, and ies such as London and Perth. breakdowns happened in 2011, the testable bus model work in Singa- combined again in 1973 to form London Mr Cedric Foo, current and authorities’ priority quickly shift- pore. Singapore Bus Services (now SBS then chairman of the Government ed to solving those problems, The firm recommended that Transit). Parliamentary Committee for which they tried to do by pump- the LTA adopt a gross cost con- In 1982, Trans-Island Bus Ser- Transport, had also proposed carv- vices (now SMRT Buses) became ing up the island into regions, and the second public bus operator – Getting the public bus system right is no easy letting companies bid to operate the arrangement in place today. road. Private operators need to make money, in each region for a specified ten- Various experts told the LTA there would be The Government had received commuters want affordable fares and good ure. complaints about the SBS monopo- He made that suggestion then greater competition if barriers to entry were ly back then, and allowed a sec- service. Singapore is now looking to the London as the status quo of a duopoly was lowered... The LTA settled on owning the ond player into the market to in- solution of contracted routes. Is this the ticket unsatisfactory, he recalled. troduce some competition. “There were only two players buses, so potential operators would not have As for the new model, the big- to a better ride? (SBS Transit and SMRT), each op- gest challenge would be how to erating bus services for different to make that substantial investment. transition smoothly from one oper- By ROYSTON SIM ders to operate routes for a dura- parts of Singapore,” he said. ator to another, said Mr Yeo. One tion of five years, with a two-year “There was no competition, and I option the LTA is exploring is to LONDON resident Peter Smith extension for good performance. believe effective competition will further divide each package of may be 78, but he happily takes The contracts are termed quali- drive performance.” ing in $1.1 billion to put 550 more tract, where it keeps fare revenue routes into tranches for handover, the bus at least twice a week. The ty incentive contracts. Under The Government took heed – buses on the roads. and absorbs revenue risk, instead so a new operator does not as- retiree says the bus system has im- these gross cost contracts, TfL in its 2008 Masterplan, it outlined Planners also felt a logical time of a net cost contract, where the sume control of more than 20 proved since the switch from a sin- keeps the fares (as the LTA plans plans to have operators compete to introduce the sweeping chang- operator keeps the fares. routes in a single day. gle, nationalised operator to a con- to do here) and pays operators a for packages of bus services. Oth- es would be in August 2016, when Mr Richard Smith, transporta- This could minimise disrup- tracting model. sum to run services, but an incen- er major changes included making operating licences held by the two tion director with CH2M Hill, tions to commuters, and also give “The buses are much better tive-penalty scheme is worked in the Land Transport Authority bus operators, SBS Transit and said: “Gross cost is a useful model a new operator more time to hire than they used to be. There are to keep service quality high. (LTA) the master bus route plan- SMRT, expire. to start where there is a need to drivers if needed, he said. more of them, and they travel fast- Operators are paid about £4 ner in 2009. Finally, issues such as owner- bring about reform.” “We don’t underestimate the er because of the bus lanes.” million (S$8.4 million) to £5 mil- The rationale was that if it ship of bus assets and type of con- With a gross cost model, the scale of the challenges, and the London’s bus system is a suc- lion a year. An amount (£5 a mile, opened the market up to competi- tract for the new model had to be bidding process is straightfor- complexity of the issues. There cess – ridership has grown, ser- for example) is deducted for mile- tion, operators would be com- ironed out as well, Mr Yeo said. ward, he said. The model also al- may be hiccups along the way, but vice reliability has improved and age not operated for reasons such pelled to provide better service “You must have a set of specifi- lows the regulator the flexibility we’ll do our very best.” customer satisfaction is at a as bus breakdowns or staff show- and become more efficient – cations that can tell very clearly to change routes based on de- Mr Jaspal Singh, chief execu- record high. ing up late. Operators are not pe- which in turn could lower costs. what is going to happen through- mand, and better integrate bus ser- tive of London bus operator But it did not arrive at this nalised for traffic disruptions. Yet, it wasn’t until last month out the length of the contract,” he vices with train services. Metroline which is a subsidiary of state without several wrong turns Routes are typically tendered that the Government announced said. “If you have uncertainty, Various experts told the LTA SBS Transit’s parent group Com- along the way. in tranches of five to six, with it was ready to make the shift. you’re not going to get a cost-ef- there would be greater competi- fortDelGro, calls this latest move The experience holds lessons 15-20 per cent of the network ten- Why did it take six years? fective proposal.” tion if barriers to entry were low- “revolutionary”. for Singapore, where a gradual dered each year. Mr Yeo Teck Guan, LTA’s When the overcrowding on ered, Mr Yeo said. “The Government is formally change to contract-based routes However, until 1985, buses in group director for public trans- trains surfaced as a hot-button is- The LTA settled on owning the taking over responsibility and ac- awarded under a tender system London were run under a national- sue in 2011, the LTA had yet to de- buses, so potential operators countability for the provision of was announced last month, to ised model. cide if it should own the buses and would not have to make that sub- public transport,” he said. “If it is Since moving to a contracting model, raise the quality of service. That year, London Transport London’s bus system has seen depots under the new model. stantial investment. implemented the way London has Currently, licensed private op- (now known as TfL) started com- ridership grow, service reliability And even if tenders were called It also decided to own the bus implemented it... issues of reliabil- erators SBS Transit and SMRT petitive tendering to reduce the improve and customer satisfaction at that time to introduce competi- depots, to overcome the issue of ity and inadequate capacity will run public buses according to cost of providing bus services. reach a record high. tion, it would have taken a new op- land scarcity, as new operators be a thing of the past.” standards set by the Public Trans- Mr Simon Thomas, contracts ST PHOTO: ROYSTON SIM erator two to three years before it could have difficulty finding new ROYSTON SIM port Council. tendering manager for TfL’s bus But in recent years, commuter division, tells Insight this was complaints about overcrowding done “slowly” and “quite cau- and long waits have increased. tiously” – something Singapore How London does it: Pro-active intervention key to beating gridlock Continuing pressures on the seems to have learnt from with its bus network mean it is timely for careful approach (see side story). IT IS Wednesday, June 4 – the eight to 10 minutes but is now Contracts”, which reward or standard. people and making sure that it controllers before curtailing for a similar centralised fleet A service controller with London bus a rethink of the relationship be- In 1989, London Transport’s date of the annual State Opening arriving every 25 minutes or penalise them based on excess Since the incentive-penalty works.” routes, as they oversee the entire management system. SBS and operator Metroline, a subsidiary of tween the Government and opera- subsidiary was split into 13 small- of Parliament in central London. worse. Mr Suarez starts waiting time (EWT) – the contracts were introduced, EWT Operator Metroline, a bus network. SMRT currently use separate Singapore-based ComfortDelGro. tors, says Mr Richard Smith from er, publicly owned companies to Roads around the Houses of instructing drivers to cut short average time commuters spend has gone down from two subsidiary of Singapore’s Since 2012, TfL has begun systems. Singapore is also trying Metroline has about 180 service consultancy CH2M Hill, which re- compete with private operators. Parliament are closed, and their trips. He sends these buses waiting at a bus stop when a bus minutes to one over 10 years. ComfortDelGro, has about 180 using a system named iBus that out an incentive-penalty scheme controllers. ST PHOTO: JERMYN CHOW cently did a study on bus contract- These were privatised by Janu- traffic has slowed to a crawl. around the congested area to is late. Go-Ahead has about 130 service controllers. allows it to track the location of on 22 bus routes with reliability ing here. ary 1995, and London Transport The gridlock is wreaking serve passengers at stops farther Operators get a bonus of 1.5 controllers managing its buses. They undergo intense every bus in London in problems. The former director of plan- then began experimenting with havoc on bus schedules. Mr down the route so they do not per cent of the annual contract It is vital to have the right training, and a significant part of real-time. Bus routes are Another aspect Singapore has or TUPE. ning at Transport for London net cost contracts on new routes. Jorge Perea Suarez, 49, a bus have to wait too long. price for every 0.1 minute schedule and good control their daily job is cutting routes relatively short to help studied is how bus drivers’ This gives drivers on a route (TfL) – the equivalent of the Land For net cost contracts, unlike controller with operator “There’s no point sending improvement in EWT above a strategies, says Go-Ahead short to keep service at regular reliability, says TfL contracts interests are taken care of when that changes hands the right to Transport Authority (LTA) – gross cost, operators keep the Go-Ahead London, tells Insight: every bus through,” he says. set baseline standard, up to 15 managing director John Trayner. intervals, says Metroline chief tendering manager Simon they are affected by contracting. move to the new operator, on notes that an expanding MRT net- fares and bear revenue risk. “All my services are affected.” Such pro-active intervention is per cent. “We maintain ‘headway’ almost operating officer Sean O’Shea. Thomas, adding that there are In London, bus driver equal or better contract terms. work will mean major changes to “The theory is that operators One service he is monitoring the key to buses running at Conversely, they can be like a religion. We’re looking at Metroline chief executive long routes but the majority do transfers are governed through For instance, 1,000 out of the bus network. would have the incentive to pro- from Go-Ahead’s Stockwell regular intervals. penalised up to 10 per cent of every vehicle, when it’s going to Jaspal Singh notes that not exceed 11km to 13km. legislation called Transfer of Go-Ahead’s 6,000 bus drivers “A contracting model will en- vide better quality of service if Garage control centre is No. 68, Bus operators in London are the annual contract price for be held up, what do we need to controllers have to check with Singapore in April this year Undertakings (Protection of moved over through TUPE. able the LTA to specify more di- they had some benefit financial- which usually has an interval of placed under “Quality Incentive falling below the prescribed do – communicating to the bus authority TfL’s own awarded a $68 million contract Employment) Regulations 2006, ROYSTON SIM rectly the routes, frequencies and ly,” Mr Thomas says. capacities required,” he says. However, service quality took Insight went along for a ride in a hit, and London Transport faced London to see how its system opposition when it tried to make mas says. “That doesn’t mean to Under the contracting regime, works, and how that might trans- changes to the network, as opera- say lowest cost always wins.” London has seen customer satis- late here. tors would argue that their reve- Moving to bus contracting Factors taken into considera- faction with buses rise from 75.3 The route to nue was affected and ask to rene- In adopting a new model, Singapore drew extensively from the tion include driver recruitment per cent in 2001/2002 to a high of a new system The road to improvement gotiate contracts. plans, having enough buses, sched- 82 per cent now. Says Mr Jaspal Singh, chief ex- experience of other cities, especially London and Perth. ules, service control and the abili- A key factor that Singapore í 2006/2007: Consultant IN SINGAPORE, customer satis- ecutive of London bus operator Singapore London Perth ty to start on time. must consider is that an extensive Booz Allen Hamilton faction with buses has long been Metroline, a subsidiary of SBS Government will own Metroline chief operating offi- bus service does not come cheap engaged to conduct a below levels seen with the MRT. Transit’s parent company Com- Operating structure Operators provide depots Government owns depots and cer Sean O’Shea estimates that – TfL pumps in a subsidy of sever- review of land transport depots and buses, and buses, manage and buses, leases them to operators. An annual survey on public fortDelGro: “With net cost, it was lease them to operators. maintain them Operators run services, manage TfL awards about 75 per cent of al hundred million pounds a year. í 2008: Government transport found that 82.3 per cent chaos on the road. Operators run services, and maintain bus infrastructure tenders to the lowest bidders. Still, TfL has managed to re- reveals intention to of commuters were satisfied with “The operators would not want manage and maintain bus and assets With nearly 19 per cent of the duce that from £563 million in infrastructure and assets introduce competitive buses in 2007 compared with 94.2 to leave the bus stop because the London bus market, Metroline is 2008/2009 to £377 million in tendering to the bus per cent for the MRT. However, more passengers they got, the Model Gross cost contract, Quality Incentive Contract Gross cost contract where the third-largest player there. 2012/2013. with incentives worked industry in its Land satisfaction with buses increased more they benefited.” (gross cost contract + incentive operator is paid to provide Mr John Trayner, managing di- Mr Thomas says this was done Transport Masterplan to 88.3 per cent last year. London abandoned the net cost in to ensure reliability provisions): the operator is services and Government rector of Go-Ahead London – the by tightening standards on its con- That was thanks to more bus- model after 1998, introducing paid to provide services keeps fare revenue. largest of the city’s operators – tracts, so it does not pay out as í 2009: LTA takes over as while fare revenue is kept master bus route planner es, via the Bus Service Enhance- quality incentive contracts in by the Government. notes that staff costs, including much in bonuses. ment Programme (BSEP) intro- 2001. those for drivers, account for In addition, each route is now í 2012: $1.1 billion Bus Operators are rewarded or Service Enhancement duced in September 2012. This The incentive-penalty scheme penalised based on how reliable 60-65 per cent of its bids. contested by an average of three puts 550 state-funded buses on has helped improve service relia- their bus services are Fuel costs take up about 10 per operators, he says. “Because the Programme announced the road to increase capacity. bility, with buses now late by no Tender package 12 packages of routes with Individually tendered in Packages of about 20 to cent; other costs include those for good quality competition is there, í 2013: LTA engages The BSEP was an acknowledg- more than a minute on average, 300 to 500 buses per package tranches of about 5 to 6 routes 40 routes, with about engineering and vehicles. prices have been coming down. consultant CH2M Hill to ment that private, profit-driven down from two minutes in 2001. 120 to 140 buses each Go-Ahead generally prices for The cost of running the bus net- study bus contracting in operators could not improve bus CH2M Hill’s Mr Smith says the Contract period 5 years + 2 years extension 5 years + 2 years extension 10 years a profit margin of 10 per cent in work has been reduced.” Singapore services at the scale or speed that gross cost model is suitable for Progressively from 2H2016 its contracts, Mr Trayner notes. With Singapore moving to a í 2014: Government the Government desired. Singapore as the bidding process Implementation date Since 1985 Since 1995 At Metroline, Mr O’Shea says similar model, observers expect Population 5.4 million announces move to a bus SBS Transit and SMRT were re- is straightforward, and it allows 8.4 million 2 million labour costs account for 65-70 that the LTA will have to fork out contracting model, routes luctant to increase their fleets too for flexibility to change routes or Area 716.1 sq km 1,583 sq km 6,417.9 sq km per cent of its bids. more money to subsidise the net- to be split into 12 packages quickly, as they were making loss- schedules. In Singapore, various parties work, in return for better service. Population density 7,540 4,542 310 for tendering es on their bus operations, and The London network regulated (person per sq km) have expressed interest – includ- “It’s inevitable,” says Assoc fare increases had not kept pace by TfL has 700 routes run by sev- ing incumbents SBS Transit and Prof Menon. í Second half of 2014: First Standard bus routes 270 700 290 with rising costs. But commuters en major bus operators and sever- SMRT, Australia’s Tower Transit A big question mark remains package of routes to be 5,400 (by 2017) resisted fare hikes, as both opera- al smaller ones. Fleet size 8,600 1,300 and local private bus operators over fares under the new model, tendered out tors remained profitable overall. Buses and depots are bought Number of Three to five (targeted) Seven major operators Three such as Woodlands Transport, however. í 2016: SBS Transit and With the BSEP under way, the and owned by the operators – one bus operators and a few smaller ones which is one of the largest. With SBS Transit and SMRT SMRT’s operating licences LTA focused on finding a more facet of London’s system that Sin- Nanyang Technological Univer- still running the MRT in addition expire, will run nine of 12 Source: LAND TRANSPORT AUTHORITY Commuters at a bus stop next to the Clementi MRT station. Customer satisfaction with buses increased to 88.3 per cent last year, following the introduction of the sustainable system, and it looked gapore will not adopt. Here, the sity adjunct associate professor to buses, the LTA has said they route packages under new ST GRAPHICS Bus Service Enhancement Programme (BSEP) in September 2012. ST PHOTO: KUA CHEE SIONG mainly to London and Perth for Government will buy new buses, Gopinath Menon says the incum- will continue to apply to the Pub- model for about five years role models. and it is still deciding how to pay Issues for Singapore Under London’s system, the first route packaged to be ten- bents have the advantage of expe- lic Transport Council for fare in- í 2022: More bus services In London, a combination of for those owned by the operators. checks are done on a firm’s finan- dered later this year, but details rience, but does not rule out a creases. What this means for bus Following suit Competition keeps bus opera- high-quality bus service that re- bus regularly: “It’s great. The bus- to be tendered out after better service and greater capaci- The LTA follows Perth’s exam- SOMETHING that Singapore is cial status, management capabili- are still being worked out. new party winning the tender. fares is unclear. tors on their toes, while quality in- mains cost-effective. es are efficient, and I can usually contracts expire ty saw bus ridership surge to 2.4 ple instead, where Transperth still in the process of sorting out ty, depot proposal and previous Another aspect that cost-con- “It depends on the price,” he Londoners, meanwhile, appear WHILE not without its challeng- centive contracts still allow them And commuters like the im- board the first one.” billion passengers a year in owns a fleet of 1,300 public buses from the London experience is experience, among other things. scious Singapore will have to says. “Take Woodlands Transport hardened to the reality of annual es, the London example demon- to earn profits, provided costs are provements. [email protected] í Beyond 2022: Three to 2012/2013, up 69 per cent from and leases them to the operators. how the latter subjects operators Singapore will feature some weigh up: “The tender evaluation – they’ve been in the business for fare increases, based on a formula strates how a well-regulated bus well-managed. Says financial analyst Sean five operators to run the 12 levels 12 years ago. The LTA has said this helps lower that want to bid for routes to a form of vetting process as well for is based on the most economically some time and have run premium of the Retail Price Index plus one system run by private operators The competitive tendering Donahoe, 29, who has lived in Lon- This trip to London was sponsored by packages of bus routes 1 Bus operators compete in ten- entry barriers. pre-qualification system. parties interested in bidding for advantageous tender,” Mr Tho- bus services.” per cent. can work. means TfL is able to get a don for 2 /2 years and takes the the LTA.