Wednesday, February 5, 2014

SMRT financial results and why we're not happy

SMRT recently released their financial results for the 3rd quarter and at first glance, the results do not look good. They lost about 8m for the bus operations and obviously, that would be the main area that they will keep emphasising to justify that they are doing their "best".

However, there is something left unspoken.

Regardless of how much they are losing, guess what? They are still making profits. For the 3rd quarter, they had a 20m operating profit. Why is that so?

It's very simple. The other areas of the businesses are making enough profits to make the business a viable one. This is something that has been left unsaid by SMRT. Their rental and advertising businesses made the lion share of all the profits.

What is further left unsaid is that the rental and advertising businesses is as a result of them operating the trains, stations, buses and taxis. If at any point in time SMRT for some reason or another is not chosen as the operator for our trains, buses and taxis, their business will not survive. If the government for some reason or another choose to take back the train/bus stations and the advertising space, SMRT will truly be in the red. In conclusion, all the profits SMRT makes is as a result of them being one of the operators of our trains, buses and taxis.

That is why the citizens are up in arms about SMRT being a profit driven company. You're trying to keep fares affordable, and yet let the company that manages the operations is a publicly listed company where the main aim is to make as much profits as possible.

Does it add up? Of course not. And that is why the citizens are not happy. Just imagine if this is a non-profit organisation, the amount of money that it makes can make the public transport so much more efficient and less error prone.

The quest for more profits, and the quest for affordable charges do not come together, like oil and water. Simple logic.

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