28 September, 2020, 12:22 am Central - 22°C Rain

Bus operators unhappy with the bus fare increase

Bus operators unhappy with the bus fare increase

By Naveel Krishant
Friday 24/01/2020

The Fiji Bus Operators Association says they are disillusioned with the announcement today by the Fiji Competition and Consumer Commission of a 7 cent increase in fares, and has called on the commission to state openly how it arrived at that determination.

President Nisar Ali Shah says while they are relieved to have finally got some movement after 10 years of stagnant fares, operators are struggling to understand the justification for an increase of 7 cents for all stages.

Shah says FCCC and its Chief Executive Officer, Joel Abraham, should be open and transparent about how they arrived at this fare, considering that inflation alone during the past decade has far exceeded the nominal increase that have been granted.

He says for the period 2010 to 2019 alone, the Reserve Bank’s cumulative inflation has exceeded 28 % adding the revised fare structure comes nowhere near adequately and reasonably addressing the issue of increased costs for bus operators over the past 10 years.

Shah say for Stage 1 fares, the increase is about 10.3 % from 68 cents to 75 cents, for Stage 2, the percentage increase is 6.3 % (from $1.11 to $1.18) and for Stage 3 the increase is only 4.5% (from $1.55 to $1.62) adding the percentage increase continues to diminish until the final stage, number 46, which only receives a 0.35 % increase (from $19.86 to $19.93).

He says for an institution that is mandated to review and set prices, it is the right of the Fijian people to know how the FCCC arrived at the determination and what factors were considered in the process.

Shah adds Abraham should, as a matter of transparency, publish the formula and model for arriving at what he described as a ‘robust and independent analysis’.

He claims Abraham is misleading in talking about a request for an increase for Stage 1 fare to $1.50 adding no operator has asked for first stage fare of $1.50. He further claims Abraham is also distracting from the real issue by mentioning tourist fares when these were never mentioned or discussed at all.

Shah says Abraham should stop misleading the public with his statements.

Meanwhile, the Fijian Competition and Consumer Commission has announced a 7 cents per stage increase for bus fares in the country. They say the adult fare will be effective from 10th February while the school fares will be effective from 4th May this year.

CEO, Joel Abraham says following robust and independent analysis of the submission by the Fiji Bus Operators Association and widespread public consultations with the traveling public, an increase in the maximum bus fare of 7 cents per stage has been deemed necessary for the sustainability of the Fijian bus industry.

Abraham adds it has been ten years since the last maximum fare review, and the FCCC would like to remind the public that the maximum bus fare is not a fixed fare, but rather a price ceiling on bus fares.

He says on non-exclusive routes, they encourage bus operators to demonstrate cost leadership and set competitive fares to attract customers.

Abraham says FCCC, as an independent commission, properly scrutinized all relevant financial records and undertook its due diligence on a prudent and responsible timeline, despite significant pressure to rush the review process.

He says they recognize that thousands of Fijians rely on buses as their main mode of transportation adding this fare increase supports the overall sustainability of the bus industry and will be met with measured gains in access to bus services and reliability, particularly in rural areas, where oftentimes routes run on significantly lower margins.

The CEO says the review considered changes in indices that would inflate costs for bus companies and one of the key determinants was an increase in labour costs.  He says at some companies, bus driver wages have increased by as much as $200 a week adding this was one of the many variables that were considered.

Abraham says transparency is a key priority in any review process.

The FCCC will also upload the regulatory framework used to calculate the bus fare directly to the FCCC website. 

He says this framework mandates a maximum fare review every three years and considers the financial and operational performance of the bus companies, best industry practices, changes in market dynamics and other factors that may have a bearing on the bus industry.

He adds the framework also allows for FCCC to consider changes in revenue and cost annually as a flexible mechanism, as such, if the prices of any of the cost indices drastically reduce, this will result in a decrease in bus fares adding this flexible mechanism allows them to look at the indices every year.

The FCCC had received submissions from operators that wanted an increase in Stage 1 fares up to $1.50, other submissions wanted to have Stage 1 and 2 fares pegged to $1. 

He also says there were submissions to increase fares for tourists to $2 for Stage 1.

Abraham say bus operators, and other public transport operators, need to keep in mind that everyone has to be treated fairly in all regards and charging higher fares for only Stage 1 and 2 consumers will be a massive disadvantage to everyday Fijians who stay within the 12km radius to their destination.

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