Why analysts are calling for a change in Singapore's bus model

Is the current model sustainable?

According to Maybank Kim Eng, ith stagnating bus fares and rising cost from inflationary pressure, the two existing operators have been running loss-making operations for years.

Under a business model that is financially unviable, Maybank Kim Eng analysts believe that SMRT and SBS Transit, a subsidiary of ComfortDelGro, would be reluctant to renew their bus licences when they are due in 2016.

Here's more from Maybank Kim Eng:

Hence, a change to the bus model is imminent, in our view, in favour of a tender system to award packages of service contracts.

We believe that the Land Transport Authority (LTA) is currently evaluating the merits of a tender system, as evident from the tender system used to award service contracts since the start of the year.

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