Friday, March 23, 2018

A strange reason to increase public transport fares

I read this news summary:

Public transport fares could rise after revision to fare formula
Announcing the revised fare formula on Thursday (March 22), the Public Transport Council said the new component, called Network Capacity Factor, will track the structural changes to operating costs as a result of the changes in capacity and usage attributed to the growing rail network. This means that fares will increase if the capacity growth in the public transport network outstrips ridership growth.

My comment:
It seems that the fare will increase when the capacity is not fully used. It does not seem to make economic sense. Normally, the fare should drop when there is excess supply to encourage demand.

OK. We are talking here of a monopoly and inelasticity of supply. Even if the fare increases, people still have to take public transport. They have to pay the higher fare.

In that case, why are we increasing supply in excess of actual demand? It seems that our planners have got their plans wrong!

Welcome to Singapore!

1 comment:

  1. Probably planning to accommodate future 10m population through immigration, must need sufficient rail capacity so people dun complain Govt have no 20/20 foresight on sufficient infrastructural needs.

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