What are the changes to the formula?

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

Legend:

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), adjusted for any change in the employer’s CPF contribution rate;

EI: Year-on-year change in Energy Index which is a composite index derived from diesel and electricity prices; PE: Productivity Extraction component, set at 0.1% based on half of the productivity gain achieved by the public transport operators; and

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. The new formula which will be used for annual fare review exercises from 2023 to 2027 is:

0.5 cCPI + 0.4 WI + 0.1 EI – PC + C