Are Singapore’s transport companies starting to feel threatened?

Are Singapore’s transport companies starting to feel threatened?

GrabCar

First, you had Uber and Grab Car and other new taxi-booking apps that came into the market and created a huge buzz.

Go-Ahead

Now, there has been a 2nd foreign bus operating companyUK-based Go-Ahead Group – which has won the bid to operate 25 services in the Punggol and Pasir Ris areas for the next 5 years under the Government Bus Contracting Model.

In May 2015, another UK-based company, Tower Transit won the bid to operate the inaugural government bus contract.

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The two new entrants will be a game changer to the local bus industry  which has been predominantly been a oligopoly between the incumbent SBS Transit and SMRT.

Go-Ahead is London’s oldest bus operator and has been used to competing and offering attractive pay packages, and according to its representative, it would not be compromising on quality despite its lower bid price (Go-Ahead’s bid was the lowest among 7 other tenders).

Tower Transit recently revealed its employment benefits for bus drivers which included extended maternity leave and skills upgrading opportunities. The monthly basic starting salary of S$1,865 is apparently higher than what SMRT and SBS Transit currently offers.

What does this mean for incumbents?

progressive-wage-scale

As with all forms of business competition, the service providers will need to achieve better profits, market share and sales volume by varying the price, service levels, distribution and promotion.

As such, it would be incumbent upon SMRT to SBS Transit to increase its service levels and efficiency.

Besides, operators under the government bus contracting model are assessed yearly on bus service reliability, punctuality of their first and last buses, and maintenance of bus operating assets. An additional payment will be given to operators who meet LTA’s standards, while those who don’t will have its fees deducted.

Similar to the case of Tower Transit, the firm must first offer jobs to bus drivers from the incumbent operators affected by the change. Also, the employment package offered by the new operator must not be worse off than what the incumbent operator offered.

Prior to submitting its tender, Go-Ahead and the National Transport Workers’ Union (NTWU) had been engaged in a few rounds of active discussion. This allowed the company to better understand how the Union and the company can work together effectively to resolve any issues related to the workers.

The union said that it is pleased to note that three key assurances have been included in the contract with Go-Ahead:

  1. All affected employees must be offered a job by the incoming operator;
  2. Affected employees must be offered employment terms which are not worse-off than what they have been enjoying before transition; and
  3. Affected employees can choose to join the new operator or be redeployed by their current employer, where feasible.

 

It is imperative that while the intent of having the bus contracting model was to improve bus reliability and service levels for the benefit of commuters, the livelihood of bus drivers and other support staff are not impacted by the change in employment.

 

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Arthur Lee

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