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Distance Fares

New Fares!

On 3 July, 'Distance Fares' were implemented for the buses and rail public transport system in Singapore. I got to try it out first thing in the morning that day (which is basically yesterday) while taking public transport to Tiong Bahru Market.

The journey consists of 2 legs - one bus to a particular bus stop and then I have to walk a short distance to another bus stop on another road for another bus to my destination. Before the distance fare, I had to pay $0.69 for the first bus ride; then $0.19 for the second bus ride (after the rebate of $0.50 from the base fare of $0.69). That cost me $0.88 for the entire journey.

For the 'Distance Fares' system, I had to pay $0.71 for the first bus ride, which was actually 2 cents more than what I had to pay in the past; but on the second bus ride, the fares turned out to be $0.00. In other words, it was still within the 3.2km base distance and therefore I didn't have to pay a single cent more. As a result, the journey cost me only $0.71. I'm not advertising for the new fare system, just pointing out a particular feature of it.

The new system raises the base fares (from $0.69 to $0.71) and thus would cost people much more for short rides that consist only of a single bus. Compared to the past, commuters of this sort of rides would have to pay 2 cents more than the past. For those who need to change buses over short journeys, the new system would cost a little less. These commuters would save approximately 17 to 19 cents. The more buses you originally had to transfer within your journey, the more you would save. Over extremely long distances on a single ride, commuters would pay about the same level; possibly less because of the per kilometre charge that allow you to pay a more 'exact' fare.

Adult Bus Fares MC curve

I've worked out the marginal cost every additional kilometre as you ride on the bus. When you've already 'clocked' 26.2 km, every additional kilometre only cost you 1 cent. The good thing is that you have about 45 minutes lag time between transfers, which gives you ample time to do quite some shopping or eating before moving off to the next stop. That said, you would actually take a bus to CK Tang, walk around for 30 minutes before going back to the bus stop to take a bus to Heeren and then walk around before moving off again. You'd be paying less than if you had done the same in the past, though it makes little sense to do that.

If you're like me in the sense that you are always on the go and need to have meals between destinations, the distance fare is a good thing. I could take a bus, stop by somewhere to have a meal (within 45 minutes that is), and then hop on another bus bound for my destination. That saves me approximately the 17-19 cents that I was talking about earlier. The question really is whether the transport companies are earning more from this whole system. I would say not; the thing is that majority of commuters can't possibly have been taking buses only over short distances.

Majority of the trips taken would be within the 6.2km, where the marginal cost of each additional kilometre is 10 cents, and the profit for the company would be the highest. The difference could be that commuters would be encouraged to make transfer that they otherwise won't, allowing the transport companies to make an additional 1-6 cents or so for these sort of transfers while also utilizing their idle capacity. The company essentially manage to apply a more powerful price discrimination that forces customers to pay for the distance they travel on the bus. This is possible because of the market dominance of the firms though I really wonder how SMRT and SBS Transit would share their revenues later.

Further investigations on the effect of the new 'Distance Fares' system is conducted over my personal blog.