Who pays the fines? SMRT or Passengers?

LTA slapped SMRT with a S$387,176 fine for the 7 hours train disruption on 21 Jan 2008. My first thought when I hear the new was, who is the person being fined? SMRT or Passengers? While the fine is imposed on SMRT, we all know that SMRT will surely apply for another fare hike later this year to recover the amount lost.
SMRT passengers are the ones who were affected by the train disruption. And later, they will also be the one who pays for the fines. Is that fair?
The idea of imposing a fine on someone is to make them feel the pain so that they will not commit the same error again. But for this case, I don’t see why SMRT will feel the pain after paying the fine. Just include the fine as lost of revenue and they can apply for a higher fare hike. Isn’t that good?
Instead of punishing them in terms of money, why not punish them in terms of numbers of years which they cannot apply fare hike?

SMRT fined almost S$400,000 for 7-hour train disruption in January
SMRT will be fined almost S$400,000 for the severe disruption to its train services on 21 January.
The Land Transport Authority, which imposed the S$387,176 fine, has given SMRT up to two weeks to justify why that the penalty should not be imposed.
The LTA concluded that the 7-hour disruption was due to SMRT’s working party not complying with operating procedures. This was specifically on securing the parked portion of the maintenance train, which comprised a locomotive and a wagon.
According to operating procedures, during maintenance works, the portion comprising a locomotive and a RGV (Rail Grinding Vehicle) will proceed with its works, while the portion of the maintenance train is detached and parked at a distance from the working zone.
However, investigations from LTA and SMRT showed that on 21 January, SMRT did not apply the locomotive’s parking brake. There was also no wheel chock placed to prevent movement along the gradient of the track.
If SMRT had followed operating procedures, a roll-back would have been prevented.
Some 57,000 MRT passengers in the eastern part of Singapore were affected by the disruption, which occurred in the morning.
Train services were disrupted for seven hours and 17 minutes between Tanah Merah and Pasir Ris MRT stations.

17 comments

  1. Not allowing fare hike is a very dangerous idea. You are still thinking from the consumer’s point of view.
    SMRT has shareholders and there is a need to register a decent profit growth. Matching increasing energy pricing, there is an unevitable need to increase fare. What should be done to combat fare hikes is to do a nationwide benchmark for increased daily expenditure and peg it to our salaries which are not rising as fast.
    And contary to public knowledge, there was a proposal for a SMRT fare hike, which was duly rejected because it is unofficially pegged to bus fares. Due to the lack of a high increase of bus fare, mrt fares were not raised. That is not to say smrt fare hikes are not going to happen this year, but rather it WILL happen, but of no consequence to this fine.
    Why am I so protective of fare hikes? Because although I barrage my friend who is somewhat involved in smrt fare hikes constantly, I see the need to do so. It is only right to show the shareholders that the company is constantly growing, instead of de-profiting yearly.
    I would like to ask most people to empathise with rising transportation fares and put themselves in the shareholders’ shoes. Would you drop your companies’ profits YEARLY to please your customers? If not, then why should SMRT?
    Dhope’s last blog post..Students complain about Total Defence Day – Why not?

  2. If SMRT wants to increase fares, it has to improve the quality and efficiency of the train services. So far, fares have already gone up, the service standards do not equal to the money the commuters are spending. If SMRT wanted to call itself world class, then behave like a world class transportation company.
    If the SMRT shareholders care about profits only, then we can expect the commuters to be screwed all year round. How would the SMRT management improves the quality of their services when it does not spend extra money?
    The shareholders need to understand that at the end of the day, the people that create the profits for them are your regular train commuters. Not the management team, not the trains, not the tracks and not the train stations.

  3. Well, I will never expect prices to go down. Unless the average Joe can earn double from what they’re earning now.
    Of course, seeing it “going down” is going to be a miracle. SMRT is a service, and service has a price. That’s what Singapore is. A service hub.
    Anyway, since SMRT didn’t comply to certain regulations, of course they would be fined by the authority. You did something wrong, you pay for it. Quite simple?

  4. “SMRT has shareholders and there is a need to register a decent profit growth.”
    Then de-list it in from the exchange. Let it becomes a truely public company that serves the members of public.
    Their challange would then be not how to generate decent profit but how to balance their P/L including improving service standard and efficiency.

  5. >>>There are also other ways of increasing profits like cutting costs and increasing efficiency?
    Agree. In an inelastic market like transport (where it’s hard for customers to not use your service/goods because there are few alternatives), any fool can increase profit by raising prices. You basically write your own cheque, when your customers have no choice but to cough up or not travel at all.
    The real measure of efficiency (which should be rewarded at the market), really ought to be increased volume of satisfactory transactions at a sustainable cost. Or in other words, their long term profit growth really ought to come from having more customers, and better satisfied customers, without undue increases in business cost. Costs can be lowered or managed through technology, business efficiencies etc. so that the same X dollars of expenditure can give you more and better train services year on year.
    The basic fact is that any corporate body out there is liaible to un-profitability. It’s how the market tells you when you’re not doing something right. I therefore fail to see why we should guarantee SMRT profitability year on year as a given. That’s protectionism and it’s regressive.
    Mind you the problem of regulating basic privatised services that used to be nationalised has not been satisfactorily resolved in many many places around the world — just look at the mess that British Rail and US healthcare is in…

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