E-mail to PTC on Premium Bus Service

Inspired by MollyMeek's post
Also read the press release from PTC (opens a PDF)
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Dear PTC
Thank you for your move to grant more bus licenses. I appreciate your decision to give consumers more choices.

However, with all respect, I'm bothered by requirement three of your license (point 6c in your Press Release) that fares must be 1.5 time of existing services. I believe the minimum fare requirement should be removed for two reasons:

1. The third requirement appears redundant. The first two requirements of air-conditioning and all-passengers-seated already make the costs of running the new service higher than the current services. Moreover, the new provider has start-up costs and higher base costs due to the relative lack of scale.
2. The third requirement discourages competition with existing services. If the new provider makes an incredible productivity leap, it may be able to offer comparable fares yet superior service, competing with existing services on price and product. By mandating a fare floor, the new provider is unable to compete on price, but only on product. This protects the current service providers SBS etc. By limiting competition we preclude the emergence of a new low fare, premium product. Before JetBlue and Southwest airlines revolutionized the US airline industry, no one imagined a lower fare, premium product would be viable.
   

Your survey indicates that commuters may be willing to pay higher prices for better services. Although that means Singaporeans are willing to pay higher prices, it does not mean they prefer higher prices over lower prices. I sincerely encourage the PTC to consider removing the third clause and let market forces act.

I understand the PTC may have done further detailed research not revealed in the press release, and I would be interested to read about the deeper underlying reasons of the third requirement.

Thank you for reading my letter, and I look forward to your reply.