[sustran] Re: Determining MRT fares?

Obwon ob110ob at idt.net
Sat Dec 4 06:23:37 JST 1999


I'd probably go for a small loss over the first couple of years!
The reason:  If this is a big project with a long term expected return that is to
be more dependant on the perihiperal businesses, then a culture needs to be
established that can be depended on for a long time.

   Cultures are hard to establish!  They are even harder to keep 'seated' when
there are competitive options as there are likely to be over long hauls.  But it
seems to me that this project is designed specifically to depend on a culture of
consumerism of varying types.  Thus, a low price not only builds higher volumes
rapidly, but they encourage people to stay 'in the system' longer, perhaps even
using it as an entertainment option.  Much like the trolley cars of old America
where families rode them on Sundays strictly for their amusement.

   So, if one stop is near theaters, another near gov't facilities and others
near other and varied points of interest, then it will be easy for people to
amuse/entertain themselves with a variety of fare simply by remaining in or near
the system and using it often and freely.

   A higher cost causes people to limit their use of the system to only the most
productive trips.  The lower the fare, the less "Productive" trips will have to
be, before people will take them.   And since people like to travel in groups,
the more trips that will be taken for less "productive" activities, the payment
of fares usually falls more on the better off members of the group: ie. parents
for kids,  friends for friends encouraged to tag along for company etc.,

   So, a lower fare allows people to more easily subsidies others and still use
the system not just more often but for a wider variety of reasons.

  Just my two cents
  Obwon

Ronaldo R. Manahan wrote:

> The contract between the Philippine Government and PT Citra Lamtoro, who
> built the Manila South Skyway (elevated urban expressway), included a
> parametric formula for toll rate escalation, based on a number of factors
> such as exchange rate, inflation, and a host of others.  Should government
> not be able to enforce the pre-agreed rate (e.g. due to political pressure,
> or a court-imposed restraining order), then government pays PT Citra the
> difference.  This rate increases cover the whole duration of the concession
> agreement.
>
> If government decides not to impose the increases, then non-users will
> again end up paying for the benefits gained by the users.
>
> In the case of the MRT Line 3 along EDSA, there has been prescribed fares
> included in the financial analysis as part of the proposal submitted to the
> government, which is cleared by the Investment Coordination Committee of
> the National Economic and Development Authority (NEDA-ICC).  Of course,
> these are financial numbers which would determine viability of the project.
>  As operator, government should have thoroughly scrutinized these numbers,
> and presumably they did.  I remember an average fare of about P1.30 per
> kilometer in 1995, when we did some studies on this project.
>
> Conditions now are much different from conditions then.  For one, the
> financial crisis was not taken into account when they first run those
> numbers, and when the project was first approved.  The costs would have
> presumably changed, but that is a risk for the prime contractor (Sumitomo)
> to insure against.  Anyway, government must have done a review of those
> numbers to take all account of these considerations, and decided on the P44
> fare.  President Estrada has ordered that this be lowered, but I am not
> sure where he got his new figures.
>
> Dojie Manahan
> Transportas
>
> At 15:16 03 12 99 +0800, you wrote:
> >I do not think there is anything wrong with determining fares close to the
> >opening of the project. At the planning stage the fares are notional. On
> >such free-standing project (I mean those projects targeted with a financial
> >or economical viability) and especially railway project where construction
> >period is long and accurate financial budgeting is often inaccurate, it is
> >difficult to determine fares at the planning stage (meaning at least 5-6
> >years before opening). Generally, a minimum return is targeted from the
> >planning stage and fares to achieve that return are determined closer to the
> >opening of the project (I am just stating what is common practice. It may
> >not be the best practice)
> >
> >Alok Jain
> >Hong Kong
> >-----Original Message-----
> >From: Roberto Verzola [mailto:rverzola at phil.gn.apc.org]
> >Sent: December 3, 1999 8:51 PM
> >To: heckler at quickweb.com.ph
> >Subject: [sustran] Re: Determining MRT fares?
> >
> >
> > >Skytrain, there has been debate about what fare to charge. It's a BOT
> > >project so the builder wanted to charge Php 44 (Php 40.8/US$1) from
> > >Quezon City where it starts to Makati where it currently ends. It is
> > >not clear whether fares would be distance based although there is
> > >talk to that effect. Anyway, the operator said that they needed to
> > >charge this much in order to get economic returns although malls are
> > >being built at the major stops from which the operator will earn
> > >income (in fact, at its inception, the malls were included precisely
> > >so that fares could be kept low and the operator could recoup its
> > >investment from their operation rather than the fare). The current
> >
> >It is a sad reflection of the kind of planning done with the Metro
> >Manila rail transit that the fare is being debated on when the project
> >is about to be finished, rather than before it was to be approved...
> >
> >Roberto Verzola
> >



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