SMRT rail ridership up 12.3% in June

Increased connectivity of public transport and high costs of car ownership boosted ridership growth.

Rail ridership for June’10 grew 12.3% y-y with full contribution from the circle line, while ridership for the first 6 months grew 11.1% y-y (forecast: 10% growth). Bus ridership for May grew 5.8% y-y (YTD: 5.4%). Philips Securities Research is seeing strong growth in the usage of public transport especially in the rail segment which could be attributed to the increased connectivity of public transport, high costs of owning a car as COE prices remained at record levels and increased tourism arrivals.

The research company thinks that average fares are likely to trend higher from Jul’10 onwards as the 3% fare reduction introduced in 2009 is replaced by the current 2.5% reduction, according to a Philips Securities Research report.

Meanwhile, with the recent scrutiny on the security of depots in Singapore, Philips Securities research expects both public transport operators to beef up their security measures to prevent a similar vandal incident from happening again. These measures will certainly result in higher operating costs as more personnel are deployed and more security cameras are installed. Furthermore, the law minister has publicly stated that public listed transport operators should be fully responsible for their own security costs and there will be no subsidies from the government.