Bus and train fares will drop by up to four cents per journey from Dec 27, the Public Transport Council (PTC) announced yesterday after its latest annual review.
The adjustment, which takes into account last year's drop in energy prices, is timed to coincide with the opening of Downtown Line 2, and is four months earlier than usual.
The reduction is the maximum 1.9 per cent allowed in a fare formula that weighs inflation, wages and fuel or energy prices. It will impact SBS Transit's revenue by $15.7 million, and SMRT's by $20.4 million.
The cut follows substantial rises granted in two previous adjustments, which saw fares rising by 3.2 and 2.8 per cent respectively.
From Dec 27, card-paying adults will see their fares drop by one to four cents per journey, while students and senior citizens will see cuts of one to two cents. A family of two adults and two school-going children could see its fare expenditure fall by more than $86 next year.
PTC chairman Richard Magnus said: "This year's decision to reduce fares for commuters is in line with the negative quantum yielded by the fare adjustment formula due to lower energy prices. We have decided to grant the full quantum of reduction to benefit commuters and to keep fares affordable."
Low-wage workers will pay one to four cents less, while people with disabilities will pay one to two cents less. But monthly concession and off-peak passes for the latter group will remain unchanged at $60 and $40 respectively. Both groups will continue to get 15 to 25 per cent fare concessions.
Commuters who pay cash, said to constitute merely 3 per cent of the total, will not see any reduction. Mr Magnus said this was to encourage people to pay by card.
As their revenue will contract because of the fare reduction, the two transport operators are not required to contribute to the Public Transport Fund this time round.
The fund is used to disburse vouchers to needy families to help them defray fare increases. The Transport Ministry said the fund will have a balance of around $8 million by next March. Of the 250,000 vouchers worth $30 each previously set aside, more than 180,000 were redeemed as at Sept 30. Needy commuters have up till March 15 to apply for the remaining vouchers.
Separately, Mr Magnus said the council will decide how to adjust fares next year when the contracting model for buses kicks in. In such a model, an operator is paid a fixed sum to run a package of routes by the Land Transport Authority, which, in turn, collects fare revenue. This operation is usually subsidised by taxpayers, making it more complex to accrue cost and compensation.
The current fare formula takes into account changes in inflation rate, wages and an energy index that charts oil and electricity costs - all of which are proxies for costs faced by an operator.
Mr Cedric Foo, who was chairman of the Government Parliamentary Committee for Transport, said the latest revision "makes sense".
"It proves that the formula works, and that it works both ways," he said. "It is also noteworthy that the PTC had granted the decrease provided by the formula in full."
This, he said, contrasted with times when it granted only partially quantums allowed for by the formula. "That is good to know," he said.
This article was first published on October 24, 2015. Get a copy of The Straits Times or go to straitstimes.com for more stories.