Public transport operators under threat from intense bus route package bidding war

SMRT is fielding aggressively low bids.

Public transport operators are at risk from the intense bidding war generated by the Land Transportation Authority’s first bus route package.

Data from Maybank Kim Eng show that SMRT submitted the lowest bid for the first package of bus routes.

Its bid of $93.7m per annum was 25.2% less than SBS Transit’s $125.2m, and well below the $130.8m average put in by all eight shortlisted bidders.

Maybank Kim Eng noted that this extremely low bid will not only put SMRT's margins at risk but also threaten the sector as a whole.

"Firstly, this could encourage other tenderers to place more aggressive bids for the subsequent two packages that are up for tender. Secondly, while there is no explicit benchmark, it may also set a low reference point for the transition of the remaining nine packages that will be held by the incumbents. Either way, the outcome is negative for the sector," stated Maybank Kim Eng.