[sustran] Re: Determining MRT fares?

roberto evangelio rocae at hotmail.com
Sun Dec 5 15:08:39 JST 1999


jain,

you are right. it is the same project that ramon is talking about. we call 
it edsa mrt. it is being implmented under the BOT Law. Its a law that 
encourage private sector particapation in the provision of services 
traditionally provided by the government.

as for the fare setting, it has been set and decided during the conception 
of the project. During that time, 1996, the average fare used in teh 
cashflow is P25 pesos. I think the approved rate of P17 minimum and P34 
maximum is just about right. The fare is also distant related with the P17 
pesos as the flagdown rate. A fare adjustment formula is part of teh BLT 
Agreement between the government and the private sector proponent (MRTC)

The basis of the fare level is not viability of the project, since the 
government still expect to subsidize its operation in the first few years. 
ICF Kaiser Consultant conducted a survey to determine the optimum level of 
fare. SO the basis are wilingness-to-pay, and the competition from other 
modes of transport in the corridor

obet


>From: Jain Alok <ajain at kcrc.com>
>Reply-To: sustran-discuss at jca.ax.apc.org
>To: "'sustran-discuss at jca.ax.apc.org'" <sustran-discuss at jca.ax.apc.org>
>Subject: [sustran] Re: Determining MRT fares?
>Date: Fri, 3 Dec 1999 15:05:06 +0800
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>Ramon,
>
>First to answer your question on how rail fares are determined. In Hong
>Kong, rail fares are determined using a hybrid of distance-based and zonal
>fare approach with due cognisance to affordability and fares on competitive
>modes. And there is no direct fare subsidy from the Government. Of course
>rail companies here run an efficient operation keeping the costs low
>(HK$17.39 per car-km operated and HK$4.62 per passenger carried). Indirect
>subsidy by allowing property development along the railway line is provided
>and used mainly to fund new extensions.
>
>A question back to you. In the Asia Rail conference last month in HK, Paul
>Daza, VP, Metro Rail Transit Corporation presented a paper on MRT III
>project which was scheduled to open sometime in Dec. (he did mention exact
>date but I don't remember). Was he referring to the same line you have
>written about in your mail? He elaborated in detail the operating
>arrangement of these Metro lines (which I thought was quite odd and unique)
>that MRTC would build it and lease it back to Government who will then
>operate it. MRTC would be responsible for only maintaining the system. All
>the revenue would be collected by Government which in turn would pay a 
>fixed
>lease amount to MTRC insuring their returns for any changes in ridership.
>Please correct me if my undertstanding is not right.
>
>Alok Jain
>Hong Kong
>-----Original Message-----
>From: Ramon Fernan III [mailto:heckler at quickweb.com.ph]
>Sent: December 3, 1999 7:10 PM
>To: sustran-discuss at jca.ax.apc.org
>Subject: [sustran] Determining MRT fares?
>
>
>Like Bangkok, Metro Manila will begin operations of its newest Metro
>rail line on Dec. 15. This is the second metro rail in the area and
>has been given the fancy name of Metro Star Express. As with the
>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
>LRT in Manila charges a flat fare of Php 10 but the gov't claims it
>is subsidizing riders at the rate of Php 60 each!
>
>There was supposed to be a public hearing held by the gov't (DOTC) on
>the issue of the fare and apparently there was public clamor to make
>it affordable to working people (who earn a mandated minimum of about
>Php 195/day). The DOTC Secretary then went ahead and endorsed the
>Metro Rail operator's fare structure anyway. (So much for
>public hearings.) However, President Estrada has ordered the
>fare lowered to Php34 for the full distance "for an experimental
>period."
>
>For comparison's sake, an aircon bus charges about Php 20 for the
>full distance although one has to sit in traffic. Taxi fare is about
>Php 100. So, how do these things get decided anyway? What's a fair
>fare? Isn't it true that metro rail fares everywhere are subsidized?
>
>
>Ramon Fernan III

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