Should Bangkok subsidise public transport costs?

The idea of a flat fare for Bangkok public transport has recently resurfaced. Since the operation of the BTS and MRT is contracted out to private companies (BTS Group, and Bangkok Expressway and Metro PCL respectively), this would likely only be possible if the government agreed to subsidize the private operators for the loss of farebox revenue.

Let’s do some back of the envelope calculations on how much this would cost based on publically available information from the BTS and MRT.

The BTS Skytrain carries around 240 million trips per year, with farebox revenue of THB 7 billion, an average fare of fare THB 29 per trip.

The MRT carries around 115 million trips per year, with farebox revenue of about THB 3 billion and an average fare of about THB 25.

If there was a flat fare of 15 baht, and the government to fully reimburse the private operators for the cost of each trip, then each journey would need to be subsidised by about 14 baht on the BTS and 10 baht on the MRT, a total subsidy of about 4.5 billion baht. About 75% of the subsidy would be for the BTS, due to higher ridership and higher fares.

However this assumes that lower fares would have no effect on ridership numbers. In practice, we could realistically assume a 10-20% increase in ridership after a fare cut, bringing the subsidy above 5 billion per annum. The opening of future lines like the Yellow and Pink lines will further increase ridership.

How could the cost of the subsidy be limited? There are two obvious ways. First it’s likely the government could agree a lower subsidy per ride in exchange for the future increase of passenger numbers. Second, the flat fare could be slightly higher. A flat fare of 20 baht instead of 15 baht would only require a subsidy of 2.7 billion baht instead of 4.5 billion baht.

Is this worth it? The pros and cons of subsidised public transportation have been debated at length. It’s clear that Bangkok suffers from heavy negative externalities from excessive motorbike and car use in the form of heavy pollution and congestion, so if the fare cut could bring commuters off the roads and onto public transport, perhaps. A 2016 study found the economic costs of Bangkok’s traffic was 11 billion baht per year.

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