Will This New Player in the Public Transport Industry in Singapore Spoil the Market?

Will This New Player in the Public Transport Industry in Singapore Spoil the Market?

For those of you old enough to remember when Singtel was the only telecommunication company in Singapore, do you remember how you felt when M1 came into the picture? And do you remember when StarHub entered the fray and was the first to offer free incoming calls? Talk about a move that spoiled the market.

As consumers, we Singaporeans became the ultimate winners in the telco wars, and eventually all the telcos were offering free incoming calls. But will what happened in the telco industry also happen to the public transport industry? That’s what we’ll find out one newcomer Tower Transit enters the Singapore market.


Who is Tower Transit and what are they doing in Singapore?

Unfortunately for fans of the local music scene, Tower Transit has nothing to do with the sadly defunct Tower Records. Instead, it is a London-based bus company whose parent company, Transit Systems is one of Australia’s main bus operators. Confused yet? Let’s put it simply – Tower Transit Singapore is the winner of the first public bus contract under the new government contracting model.


Why do we have a new contracting model?

Starting from next year, the government is phasing in a new contracting model – they’ll own the buses and the infrastructure, and they’ll keep the fare revenue. But they won’t operate the buses, or hire drivers. Instead, these responsibilities will be handled by an operator, chosen via tender.

Presumably, this should result in higher service levels for buses, since the operator isn’t concerned about making a profit. In other words, bus operators under this scheme shouldn’t need to worry about cutting corners when it comes to maintenance, or sticking to the bus schedule even during off-peak periods.


So how is Tower Transit spoiling the market?

By keeping their drivers happy. And by “happy” I don’t just mean that the bus drivers won’t go on strike, like the SMRT drivers did in 2012. I mean, Pharrell Williams level of “Happy”. Tower Transit is offering their drivers benefits that are practically unheard of in Singapore’s public transport industry. These benefits include:

  1. Free public transport on not only their buses, but all buses and MRT trains as well.
  2. 26 weeks of maternity leave, 10 weeks more than the Government-paid leave.
  3. Flexible credits of up to $700 a year – which can be used for dental care, childcare, attend upgrading courses and even gym memberships
  4. Not needing to refuel, park and clean the bus after each journey
  5. A bonus of $130 a month if drivers meet certain quality standards


Why is Tower Transit hyping up their drivers employment package?

It seems rather appropriate that Tower Transit Singapore’s first major announcement is to focus on what they can do for their drivers. Despite only having 26 routes to worry about, Tower Transit will need to hire about 750 drivers by the time they launch their services in May next year.

This means that they’ll not only need to entice drivers from the two main bus operators – SBS and SMRT, but they’ll probably need to attract others to the driving profession as well. And these potential drivers will need to come from demographics that are not typically associated with bus drivers – women, the young, and those who are looking for a mid-career switch.


Are these benefits really so enticing?

In fact, they are. Even when it comes to base starting salaries, Tower Transit is offering $1,865 a month. That’s about 5% to 10% more than SBS and SMRT’s starting salaries. That alone may be enough to attract potential drivers. Also, by offering maternity leave and paternity leave way beyond the Government standard, Tower Transit is positioning themselves as a family friendly employer.

But perhaps what is most enticing is the idea that drivers will truly be treated like bus captains – a term that means nothing if you’re wasting your time refuelling your bus, parking it and cleaning it after each journey. Tower Transit recognises that being a bus captain means a focus on driving and providing service, no more, no less.


Okay, well, that’s all good to know, but how does this affect us, the regular Singaporean?

Ideally, a happy bus captain should mean a smoother commute. Since there are incentives for bus captains to keep up service standards, as well as penalties for those who do not, we should be able to look forward to a safer, more convenient ride. However, that might not be the end of it.

One thing that needs to be asked is – how financially sustainable is this model?

The perks offered by Tower Transit look great on paper, and I have no doubt that both bus captains and passengers will benefit from these improved employment benefits and service quality standards. However, this only looks good on paper. In practice, such a model may not be financially sustainable. There is no profit incentive for the bus operator, since LTA is only going to pay them whatever fee was agreed on in the tender. At most, the bus operator gets an additional 10% in performance bonuses from LTA if they meet the standard.

As a result, whatever perks Tower Transit offers to their bus captains is literally coming out of their own pocket. While I want to believe that the management of Tower Transit has only their employees’ welfare in mind, I wonder if, after their contract expires in 5 years’ time, if they’ll decide it’s not worth staying on in Singapore.

Should that happen, Singaporeans may once again be left at the mercy of SBS and SMRT, which remain profit-driven. And that would really be spoiling the market.


Are you going to be one of those riding regularly with Tower Transit Singapore? What do you think of their presence in Singapore?