Tower Transit’s Success A Wake Up Call For SMRT And SBS

Transport analysts yesterday (May 8) hailed the fact that a foreign operator clinched the first package of routes put up for tender under the Government’s bus contracting model, saying the development would shake up the public transport sector and serve as a “wake-up call” for public transport operators SMRT and SBS Transit, which failed in their bids.

Tower Transit’s winning bid would see the United Kingdom-based company getting from the Government a fee of S$556 million over the five-year contract period — 22 per cent higher than the lowest fee submitted by SMRT.

The gap in the bid prices, said National University of Singapore (NUS) transport researcher Lee Der Horng, sends a positive signal that the Government pays greater attention to technical components instead of the price.

The Land Transport Authority (LTA) used the two-envelope process during the tender evaluation, with the quality of the proposals evaluated first. It only looked at the price proposals after the bids have passed the quality evaluation.

Nanyang Technological University transport economist Walter Theseira said an evaluation process that places greater weight on quality than price is in line with the idea behind the bus contracting model.

“The Government will suffer if they award to a company that (asks for a low fee) but can’t perform … The last thing the public wants is business as usual,” he said. “LTA is welcoming foreign operators, hoping (their) practices will be brought to Singapore.”

SIM University (UniSIM) transport analyst Park Byung Joon said Tower Transit’s clinching bid also offers a reference point and maintains keen competition for subsequent tenders.

“If LTA had awarded it to the lowest bidder, it would have dampened the spirit as foreign companies would not see the contract as profitable as they thought (it would be),” he said.

Given that incumbent operators would have a better understanding of local operating conditions and thus be in a position to tailor their tender proposals accordingly, Tower Transit must have proposed “new concepts, ideas and management practices that made them look more attractive”, said Assistant Professor Theseira.

Even so, experts and observers foresee several hiccups a foreign operator would have to overcome.

For one, Asst Prof Theseira said there will be no “honeymoon period” for Tower Transit, whose venture here is its first foray in Asia.

“The public’s expectations for the foreign operator will be higher — also because they won with a higher bid. If they come in and promise to change the way things are done but don’t deliver, people will ask why they are paying so much,” he said.

Adapting to the local expectations and recruitment are other challenges.

UniSIM’s Dr Park said commuters in Asia have different expectations from the Western markets that Tower Transit has been operating in because buses form part of the “transport backbone”, rather than being seen as a complementary service.

So, faster and more frequent services will be demanded, he added.

On top of the unique commuting habits, Tower Transit would have to learn to work with the union and the authorities, who may have management styles different from what it is used to, said Mr Seng Han Thong, a member of the Government Parliamentary Committee (GPC) for Transport.

Agreeing, NUS’ Prof Lee said Tower Transit will have to make adjustments to its practices, instead of directly transplanting them wholesale from its existing operations.

In terms of manpower, some current drivers may be less comfortable working for a foreign firm, experts said. Recruiting locals, especially those who are younger, could be tricky.

“Although (Tower Transit) has presented an attractive hiring and training plan, it has proven difficult to get young Singaporeans to join the industry today,” said Prof Lee.

“It is about changing the mindset of the industry. And of course, practical Singaporeans are looking out for good salary prospects,” he added.

Transport GPC chairman Cedric Foo said he hopes Tower Transit can innovate and improve softer aspects of bus services, as well as provide greater assurance for employees’ career growth.



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