The rights for retail and advertising on the upcoming Thomson-East Coast Line (TEL) have been outsourced, as part of efforts to improve the line's financial sustainability, the Land Transport Authority (LTA) said.
This marks the first time non-fare businesses, which are currently run by MRT operators, have been outsourced. The move is expected to bring more than $164 million in concession fees for the LTA over the 16-year concession term.
This will begin when the 43km-long TEL, which SMRT won a $1.7 billion contract in 2017 to operate for nine years, begins revenue service by the end of this year with the opening of the first three stations.
"This will generate significantly more non-fare revenue per rider as compared with today, which will substantially improve the long-term financial sustainability of the TEL," said the LTA on Tuesday.
In February, Transport Minister Khaw Boon Wan noted that both SMRT and SBS Transit chalked up operating costs significantly higher than their fare income in recent years, as a result of an enhanced operating and maintenance regime.
Singapore University of Social Sciences transport economist Walter Theseira had previously said that outsourcing non-fare businesses could eliminate "potential distractions" for transport operators.
The advertising tender was awarded to Asiaray Connect, which put in a "competitive bid" with more than $140 million in concession fees over the concession term, the LTA noted.
Asiaray Connect is a subsidiary of Chinese firm Asiaray Media Group, which focuses on airport and metro line advertising.
The retail operator tender was awarded to a consortium of three firms - SMRT Experience, JR East Business Development SEA and Alphaplus Investments - with a bid of $24 million in concession fees over the concession term.
SMRT Experience is SMRT's retail and advertising arm, while Alphaplus Investments is an investment firm under FairPrice.
JR East Business Development SEA is a subsidiary of Japanese rail giant East Japan Railway Company.
The consortium's proposal included "well-designed retail spaces with a thoughtfully curated tenant mix", said the LTA, noting that this would maximise the revenue potential of retail spaces on the TEL.
The two were selected out of seven proposals from both local and foreign firms, submitted between January and April.
"Tenderers were evaluated on the quality of their proposal, as well as their ability to grow the local non-fare business and generate more non-fare revenue from TEL advertising and retail spaces."
The authority added that given the promising outcome of this tender, it is now exploring how it can expand the outsourcing framework to other transport assets, so as to increase non-fare revenues further.
"This may include other rail lines, buses, bus interchanges, or road and pedestrian infrastructure," it added.
A version of this article appeared in the print edition of The Straits Times on August 29, 2019, with the headline 'Retail, advertising rights on TEL outsourced'.
PHAR Partnerships published article here: https://www.pharpartnerships.com/pharnews/2018/05/07/2018-5-6-lta-singapore-appoints-phar
