SMRT

[countonme]

I think a better approach is to give a loan (by lta) to the bus operators, and let them buy new buses to enhance the bus services. In this way, there is motivation for the operators to run the system more efficiently and minimise wastage. The loan given will be below market rate so that there is incentives for the operators. In return, the operators must fulfill certain requirement and meet certain criterias.

Using one observation, when LTA step in to expand the bus fleet, this probably tells us that both SMRT and SBS were not even bothered to expand their bus fleet to service the population as the cost outweighed the revenue.

As for the bidding of routes, the 2 operators may bid that excessively. After all, their main aim will be to ensure cash breakeven where (all costs - depreciation)= revenue generated from the routes. So the costs related to running the route will limit their bid amounts. In some of my previous post, I highlighted that SMRT's bus operation has gone below cash breakeven point. This mean operating cost excluding depreciation & amortisation is higher than revenue generated. If this continues, SMRT may weigh the option of not renewing their licenses come 2016.