SINGAPORE – The annual deficit incurred by the Land Transport Authority (LTA) to maintain public bus services here has narrowed to a seven-year low of $852 million.

LTA’s latest financial statements showed the public bus operations deficit fell below the billion dollar mark for the first time in six years, down from a peak of about $1.2 billion two years ago.

This decline is largely explained by increased fare revenue collected by LTA from public bus journeys and lower fees paid to transport companies contracted to run public bus services here.

This means less taxpayer money was needed to fund government grants to cover the deficit for the fiscal year ending March 31, 2024.

In Singapore, buses operate under a contractual model, meaning the government owns all the operating assets and collects the rates. Transport companies such as SBS Transit and SMRT bid for contracts to operate bus routes for a fixed period of time and for a fixed fee.

Bus fare revenue reached $898 million in the 2023/2024 financial year, an increase of about 9% from the previous $821 million.

This was higher than the $862 million collected by LTA in the 2019/2020 financial year, before the Covid-19 pandemic hit and public transport ridership plummeted.

Bus and train ridership has since rebounded, although it has not yet fully recovered. In the first half of 2024, average daily attendance was estimated at around 97% of 2019 levels.

Bus and train fares too increased over successive years.

Fares have increased by up to four cents in 2021, up to five cents in 2022 and up to 11 cents in 2023. They are expected to increase further by up to 10 cents from December 28, further enriching the coffers of LTA.

At the same time, the authority was able to reduce the service fees and incentives it pays to bus operators.

In the 2023/2024 financial year, it paid $1.61 billion to bus operators, up from $1.68 billion the year before and $1.65 billion the year before.

In total, public bus operations posted an overall net surplus of $36 million after accounting for government subsidies, which totaled $888 million.

In the 2022/2023 financial year, government subsidies for buses totaled $1.05 billion. The year before, it was $1.21 billion.

More broadly, LTA’s total operating expenditure continued to grow in the 2023/2024 financial year, surpassing $5 billion for the first time.

However, this was offset by an increase in operating profit of more than $2 billion.

As a result, the authority’s total deficit before government grants narrowed to $2.79 billion, from $2.91 billion.