Incumbent transport operators unlikely to win Loyang bus tender

LTA is keen to let new players in.

Neither SMRT nor ComfortdelGro is likely to win the second bus package under the government’s Bus Service Enhancement Programme (BSEP), according to a report by OCBC.

The Loyang bus package involves operating 25 buses for five years. Eight companies, including the two incumbents, were shortlisted for the package. The tender amount per year ranged from $99.5m to $126.3m.

CDG’s subsidiary SBS Transit submitted the fourth-lowest bid at $109.2m per year, while SMRT’s tender amount was the sixth-lowest at $119.6m per year.

Although the incumbents’ bids are low, OCBC noted that the Land Transport Authority (LTA) is not just looking for low prices but also for quality service.

“After the first bus package (Bulim) was awarded to Tower Transit Group (TTG), we think the signal given by LTA became clear that it evaluates based on both quality and price factors, and not just simply awarding to the lowest bidder,” OCBC said.

“With LTA using the tenders of the first three packages as a price-discovery mechanism and possibly taking the opportunity to allow new players into the industry, we believe it is likely the Loyang bus may not be awarded to the incumbents,” OCBC added.