The formula which was used for the annual fare review exercises between 2018 and 2022 was:
0.5 cCPI + 0.4 WI + 0.1 EI – PE + NCF
cCPI: Year-on-year change in core Consumer Price Index
WI: Year-on-year change in Wage Index measured by the Average Monthly Earnings (National Average);
EI: Year-on-year change in Energy Index which is a composite index derived from diesel and electricity costs;
PE: Productivity Extraction component, set at 0.1% based on half of the productivity gain achieved by the public transport operators
NCF: Year-on-year change in Network Capacity Factor which measures capacity provision relative to passenger demand for the entire public transport system
The Network Capacity Factor (NCF) – which can vary from year-to-year - will be replaced by a Capacity Adjustment Factor (C) fixed at 1.1%, based on the actual and planned capacity growth of bus and rail place-km from 2020 to 2026.
The Productivity Extraction (PE) will be replaced by Productivity Contribution (PC). The PC is set at 0.1% to signal to the public transport operators that they should strive continuous productivity improvements.
There are no changes to the other components of the formula, namely the core Consumer Price Index, Wage Index and Energy Index.