The formula used to determine public transport fares has been adjusted to include two fixed components to reduce variances in fare changes.
The revised formula will be used for this year's fare review, likely in the fourth quarter.
The 2018-2022 formula was made up of five components - the core consumer price index cCPI, a wage index WI energy index, EI productivity extraction,PE and network capacity factor NCF. For the new formula to reduce volatility, the last two components have been tweaked and given fixed values to reduce volatility.
Productivity extraction will be changed to productivity contribution PC and NCF to capacity adjust factor C Productivity contribution, or PC will be fixed at minus 0.1 per cent for the next five years.
What the fair adjustment quantum spits out, we will minus 0.1 per cent So you can see that as the public transport operators contribution to our goal of ensuring fare affordability, said PTC chair Janet Ang.
The PTC said the productivity contribution is to maintain the expectation for public transport operators to strive for continuous productivity improvements. Moreover, operators will have to strive to improve productivity to offset the 0.1 percent fare reduction.
The transport operators productivity gains would have been negative without government support during the COVID-19 pandemic, which was zero.
The PTC said it's important for public transport operators to be cost-effective and enhance productivity and share those gains with commuters. retaining the component is a warning to public transport operators to strive for continued productivity improvement.
The fixed amount was derived from previous performance before COVID-19.
The PE was set at 0.1 per cent during the 2018 review of the fare adjustability formula, based on half of the productivity savings realised by the public transport operators between 2012 and 2016 and was based on half of the cost savings realised in 2012 and 2016 during the review of the fare adjustment formula.