The 3.2% raise will start April.
According to UOB Kayhian, although the average 3.2% rise in fare is positive, PTOs will also have to contribute to a Public Transport Fund.
Nevertheless, the overall impact is positive and regulatory risks are positively biased.
Public Transport Council (PTC) approves 3.2% fare increase starting from Apr 14. The Singapore PTC has granted an overall fare adjustment of 3.2% for the 2013 Fare Review period. This is lower than the combined 2012 and 2013 fare caps of 6.6%.
Here's more from UOB Kayhian:
The fare increase will take effect starting from 6 Apr 14 onwards. PTC estimates that ComfortDelGro (CD) and SMRT Corporation (SMRT) will receive a net gain of S$28.8m and S$13.2m respectively from the fare hike.
Fares could further increase by 3.1% in 2015. The remaining fare cap of 3.4% (6.6% less 3.2%) will be rolled over to the 2014 Fare Review Exercise, which will also take into consideration the 2014 fare adjustment quantum. PTC estimates the 2014 fare adjustment quantum at -0.3% based on available data, which implies that 2015 could see a 3.1% (3.4% less 0.3%) fare increment.
Operators to contribute S$11.5m to a public transport fund. SMRT and SBS Transit will contribute 25% (S$4.3m) and 20% ($7.2m) respectively of the estimated increased fare revenue to a Public Transport Fund to help needy commuters.
We understand that the contribution amount will vary between 20-50% of the fare adjustment granted, and will be applied to any fare adjustments in 2015 as well.
Bus business to benefit more than rail. The additional fare revenue is targeted at benefitting the bus segment vs the rail segment given the former’s weaker financial performance. PTC estimates that with a revenue weightage allocation of 1.1 in favour of the bus mode (vs 1.0 for rail), the bus segment will receive S$48m in fare increase compared with S$5.5m for rail.
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