[sustran] Re: Depreciation periods for buses in Singapore

[Jains]

Dear Mike,

To add to an excellent summary of bus regulations in Hong Kong, I have the
following extracted from a past paper that I wrote on a similar issue:

1. Public Bus Services Ordinance (PBSO) requires a Certificate of Fitness
(COF) examination with frame check when a bus reaches 17 years of age should
the bus companies wish to extend the license for 1 more year, which is
understood to be the maximum age permitted by Transport Department (TD)
since 1998. The normal practice of the franchised bus companies is to retire
their buses when they reach the age of 17 years as the cost of COF
examination does not generally justify a 1-year life extension.

2. Buses need to pass an annual examination before they can be re-licensed
every year. At year 17, TD requires an inspection to be carried out on the
structural frame condition of the bus frame (i.e. COF inspection), which
requires extensive dismantling of the body parts.

3. TD does not specify a maximum bus age for franchised buses and would
normally allow re-licensing of buses if they pass the annual vehicle
examinations (with COF inspection at age 17 and every three years onwards,
i.e. at age 20 and 23 etc);

4. By mutual agreement, TD and franchised bus operators decided that
franchised buses should be subject to mandatory retirement when they reach
the 18th anniversary of their date of 1st registration.

5. For non-franchised buses (NFB), as long as they are able to pass the COF
or COR there is no agreement on a mandatory age for retirement. However, the
average age of NFBs are 6.7 years and they normally retire at about 10 - 12
years of age.

6. In his policy address the Chief Executive indicated that the Government
would spend $3.2 billion to provide an incentive for the early replacement
of 74,000 pre-Euro and Euro I diesel commercial vehicles with new vehicles
meeting Euro IV exhaust emission standards. The Government would allow
pre-Euro vehicle owners 18 months and Euro I vehicle owners three years to
take up the offer.
If you wish to discuss this further, contact me off-list.

Best Regards
Alok

On Fri, Jul 31, 2009 at 7:38 PM, Peter Lutman <lutman at globalnet.co.uk>wrote:

>  Dear Eric / Mike,
>
> Depreciation is an internal matter for the owner / operator of the vehicle
> and can be approached in one of several ways. Some operators will use
> "straight line" depreciation writing down the initial cost in equal
> instalments over a number of years that they choose. Some coach operators
> will write down the amount over say 8 years and use the second-hand value
> towards the purchase price of a modern replacement.  Others will use a
> percentage of the initial cost and the remaining balance each year to
> reflect the lower maintenance costs in the vehicle's early years and the
> higher cost as it grows older. (Even though depreciation is a non-cash
> charge used only for the books and maintenance is a real cost affecting cash
> flow, balancing these can be useful for accounting purposes). It is common
> in well managed companies to provide for not just historic depreciation, but
> also for replacement of the asset which will cost more as a result of
> inflation and imposition of higher standards by statutory authorities e.g.
> Euro IV or V engines.
>
> When I ran a bus company in the UK, we wrote down minibuses over 4 years,
> midibuses over 8 years and heavyweight single and double deck buses over 14
> years, but many lasted longer. London Transport got rid of hundreds of rear
> engined double deckers in the 1980s at far less than their written-down
> value (and wrote off the balance) becuase they had problems maintaining
> these vehicles. Currently they are disposing of 7 year old articulated buses
> in a similar way because the Mayor doesn't like them!
>
> The operating life of a bus is quite different from the bookkeeping - there
> are thousands of fully depreciated UK buses well over 14 years old used on
> school contract or other low-mileage work which are fully depreciated. The
> statutory requirements are that every vehicle must be presented annually at
> a Government Test Centre where it must meet rigorous safety and
> environmental standards before being permitted to be used for a further 12
> months. Spot checks may be made in the intervening period.
>
> I seem to recall that Shanghai had a limit on the age of buses which could
> be used in that region, and I believe that it may have been as low as 7
> years. While this may have been realistic for some of the rubbishy diesel
> buses which could shake themselves to bits, it was not sensible for the
> trolleybuses which can last for 25 or more years and did not seem to be
> applied to them.
>
> Turning to Hong Kong, all of Citybus and New World First Bus vehicles are
> air-conditioned as are the majority of Kowloon Motor Bus's fleet which makes
> them even greater polluters. Citybus recognised the pollution problem
> (Causeway Bay being one of the worst-affected areas) and tried hard to
> persuade the authorities that some of the very high frequency routes should
> be converted to Trolleybus operation. They converted a double-deck diesel
> bus into a Trolleybus with a small auxiliary engine for off-wire and depot
> running and erected a test track in their parking depot near Aberdeen. Alas,
> the authorities did not want to know - even the proposals to demonstrate the
> benefits on Aberdeen local bus routes and / or the redevelopment of the
> former Kai Tak airport were rejected. The same attitude was applied when
> Hong Kong Tramways built 3 modern-looking electric trams with
> air-conditioning and sought permission to charge a supplementary fare just
> as the buses do. This was refused despite the fact that the trams are
> totally non-polluting at the point of operation (although the Lamma Island
> Power Plant may produce a little more) so the A/C units on the trams were
> removed.
>
> Summing up, if a jurisdiction mandates that no PCV will be certified for
> further use after a certain age, that is one thing. It has nothing to do
> with the depreciation policies of the operator. Hong Kong only has itself to
> blame for refusing to try totally non-polluting Trolleybuses despite having
> a willing, progressive operator.
>
> Peter Lutman FCILT
>
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> ----- Original Message -----
> *From:* Eric Britton <eric.britton at ecoplan.org>
> *To:* Sustran-discuss at list.jca.apc.org
> *Cc:* mkilburn at civic-exchange.org
> *Sent:* Friday, July 31, 2009 8:09 AM
> *Subject:* [sustran] Depreciation periods for buses in Singapore
>
>   *From:* Mike Kilburn [mailto:mkilburn at civic-exchange.org]
> *Sent:* Tuesday, July 28, 2009 11:39 AM
>
>
>
> Does anyone know over how many years Singapore depreciates its bus fleet
> and whether this is mandated by law?
>
> I am asking because Civic Exchange is conducting a study of franchised
> buses in Hong Kong, as a major contributor to roadside pollution,
> and we are looking for examples of jurisdictions that place some sort of
> limit on the operating life of a bus.
>
> In HK depreciation (ranging between 14 and 20 years) is a key
> consideration, but I would be very interested to hear of any control
> measures,
> such as roadworthiness test requirements, environmental performance
> indicators, limits on engine type (e.g. Singapore has banned all pre Euro
> and Euro 1 vehicles).
>
> Many thanks
>
> Mike Kilburn
> Civic Exchange
>
>
>
>  ------------------------------
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