Lower fares will only make things worse.
The new Downtown Line Stage II is barely a month old, and yet it already poses a threat to SMRT’s rail and bus revenues.
A report by CIMB highlighted that ridership diversion by DTL Stage 2 alone will slash $5m to $6m from SMRT’s North and East-West Lines in the coming quarter.
This will be exacerbated by the $4m-5m fare revenue loss from the 1.9% fare cut.
“We believe these fare revenue losses are likely to flow through to its bottomline. Apart from the subdued fare outlook, we expect the group’s rail profitability to be further squeezed by the rising [maintenance costs] related to its aging rail network,” CIMB said.
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