IF the express bus companies get their way, passengers will soon have to pay significantly more for their tickets. Complaining of rising costs, the industry is pushing hard for a fare hike.

Konsortium Transnasional Bhd (KTB), the country’s biggest express bus operator, is calling for a 60% hike in ticket prices, while the Pan Malaysian Bus Operators Association (PMBOA) wants the fares, including those for stage buses, to be doubled.

The fare is currently calculated based on a ceiling price of 6.5 sen per km for economy express buses and 15 sen per km for luxury/executive coaches.

KTB chairman and managing director Datuk Mohd Nadzmi Mohd Salleh stresses that the hike is necessary to ensure the survival of the players. The last fare review was more than three years ago, allowing an 18% increase for economy express buses.

Datuk Mohamad Ashfar Ali

He says that review in May 2005 has helped ease the burden of increasing costs in the five years after the previous fare increase in 2000, but much has changed since 2005. The soaring fuel prices has been a huge factor.

Motorists are naturally happy that pump prices have been cut seven times since the whopping hike in June, but it is a different story for bus companies. The subsidised diesel price has remained stagnant at RM1.43 per litre.

“Although oil prices have come down, we are not feeling it. We are still paying the same price for subsidised diesel and the price increases by suppliers have not incorporated the full extent of the costs they have had to bear so far,” he tells StarBizWeek.

According to Nadzmi, subsidised diesel has increased 120% from 65 sen per litre on Jan 1, 2005, to RM1.43. Other costs, such as tyres, spare parts and services, have been going up as well.

He adds: “There is also an insufficient quota of subsidised diesel provided to us, with the quota only fulfilling about 70% to 80% of our requirement most of the time.”

For KTB, the increase in the price of subsidised diesel costs the company an additional RM35mil per annum compared with 2005.

“We don’t even make that much profit in a year. Subsidised diesel is only one cost factor that is killing us in terms of profitability – our total operating costs are now higher than our revenue collected. The costs are eating into the bones already,” says Nadzmi.

“The more we operate our buses, the higher our costs. Even if we do not operate so many buses we will still have to bear the fixed costs. So we are in a dicey situation. We are profit-making organisations. So is it fair for us to absorb all these costs?”

The Government has agreed to a 30% surcharge for economy bus fares for the Hari Raya period until Oct 15. It has been reported that the surcharge has since been extended until a new fare structure is announced.

Nadzmi says the surcharge has helped KTB reduce losses and improve cash flow.

Entrepreneur and Cooperative Development Minister Datuk Noh Omar was recently quoted as saying that despite the drop in fuel prices, an increase in express and stage bus fares next year was unavoidable due to escalating costs.

This, however, have failed to appease the bus operators. Nadzmi asks: “But when next year?”

“A quick decision from the Government is very important as the situation may change after a long delayed decision and it may not be an appropriate solution any more.”

He suggests that the Government have annual fare reviews instead of sudden, big increases, which will burden consumers and result in a contraction of demand. “We want stability in our business environment and that includes price stability,” he says.

Datuk Mohd Nadzmi Mohd Salleh

He also proposes a monthly ceiling of 9,000 litres diesel per bus. “We are suggesting that the Government look at the whole year to identify the peak months and create a ceiling based on that,” he says.

PMBOA president Datuk Mohamad Ashfar Ali says that if the Government does not agree with a 100% fare increase in view of the present economic situation, an alternative is that it converts the 30% surcharge for the Raya season into a fare increase from Jan 1, 2009.

The association is also asking the Government to reduce the subsidised diesel price for bus operators to RM1 per litre. The association represents 111 bus companies with more than 3,200 express and stage buses and over 9,000 employees.

Federation of Malaysian Consumer Associations (Fomca) secretary-general Muhammad Sha’ani Abdullah says a fare increase will definitely affect consumers as it will increase the cost of doing business and travelling.

“However, this is unavoidable because the Government has no idea how else to fund public transport other than by increasing the fare. We believe it is justified because of the increase in operational costs, such as batteries, tyres, wages and other spare parts,” he says.

Muhammad Sha’ani adds that many cities in developed countries provides public funding for public transport, so that it is accessible to all.

“It is not commercially possible to do this only from funds collected from bus fares. It is important that the Government understands the social cost if the current model of public transport funding is not reviewed fast,” he warns.