Golden Arrow finds R1.2bn subsidy not enough to ward off 7% bus fare hike

21 Mar 2024

Golden Arrow, which receives a state subsidy of about R1.2-billion, turns out to be the most expensive mode of public transport in Cape Town.

Despite receiving a subsidy of almost R1.2 billion (R 1,177,519,000), the Golden Arrow Bus Service (GABS) is set to increase its fares – its fourth fare increase in just 24 months: In March 2022, the company implemented an 8% increase, in December that year there was a 6.95% hike and a 2.7% increase in September 2023. Now commuters are bracing for a 7% increase from April.

Read more on Daily Maverick: More pain for commuters as Golden Arrow hikes bus fare yet again

The increase in fares makes GABS the most expensive mode of public transport in CapeTown, compared to MyCiTi buses and the minibus taxes.

To explain the price hike, the Cape Town-based company has again cited rising operational input costs, such as fuel, and a legacy of implementing fare increases much lower than industry inflation, placing a significant strain on the company’s ability to provide the level of service passengers expected and deserved.

GABS’ interim operating contract with the provincial government makes provision for adjustments to fares to offset operational cost increases.

“We remain acutely aware of the difficult economic climate in which our passengers find themselves and therefore took the unprecedented decision to delay our standard end-of-year increase, which should have taken place in December 2023,” GABS general manager Derick Meyer said.

“Unfortunately, we are no longer able to absorb rising costs across our supply chain and must therefore increase fares by an average of 7% on 1 April 2024.”

Commuters are advised to buy a GABS Gold Card and load weekly or monthly products instead of paying cash for tickets, in order to make the most of GABS products and access the greatest savings. GABS offers a discount of up to 45% on weekly and monthly products. The price of a GABS Gold Card, a one-time purchase, remains unchanged at R35. The price of pensioner’s products will also remain unchanged.

The bus company receives a subsidy of close to R1.2-billion from the provincial government in the 2023/24 financial year. This funding is part of the Public Transport Operations Grant (PTOG).

MyCiTi gets R1.3-billion and Go-George receives R191-million from the grant.

MyCiti and Golden Arrow operate only in certain parts of Cape Town. With a subsidy that size, commuters might expect to be shielded from the rising fuel and operational costs and inflation.

The informal taxi industry, which transports most commuters in the province, is the cheapest mode of transport.

Compared to GABS, taking a taxi works out to be cheaper during off-peak hours.

The government has been arguing that it does not provide a subsidy to the minibus taxi industry because it is not formalised.

Commuter Thando Basana said he spent R1,800 on travel costs per month from Strand to the CBD. “It feels like I am working to pay transport,” he said. “We desperately need the trains to return or affordable housing to be developed close to the CBD. If there was a party that was going to do any of the two, they would get my vote.”

Ricardo Mackenzie, provincial Minister of Mobility, said his department used an agreed fare increase formula (model) to check and verify any fare increases proposed by GABS.

“This model takes into consideration the main cost drivers for a bus company, such as the PPI [Producer Price Index], CPI [Consumer Price Index] and fuel and labour indices. The actual result of this model for April 2024 would allow GABS to increase their fares by 31.02%.”

He added that his department engaged GABS continuously to understand operational costs and advocate for minimal increases to reduce the impact on passengers.

Confirming the GABS subsidy figure, Mackenzie said the allocations had not kept up with transport inflation, which had risen significantly over the last few years due to fuel price increases.

“The result is that the subsidy covers fewer operational kilometres. In the absence of the grant, passengers would pay substantially more for bus services. The aim of the PTOG, as per the grant framework, is to make subsidised transport more affordable.”

Rail is the cheapest. When Cape Town’s Central Line was operational, a return ticket from Strand, on the outskirts of the metro, to the CBD was R22. Now residents need to cough up R90 for a daily return trip by taxi.

The Passenger Rail Agency of South Africa (Prasa) has completed the relocation of 880 families who illegally occupied the railway reserve in Philippi and Nyanga. This will assist in Prasa’s plan to fully recover the Central Line, which, if successful, will ease the burden of travel costs to commuters.

Central Line services operate along two routes from central Cape Town to Langa, and then along three branches from Langa to various areas in the southeastern parts of the city.

The Central Line has been partially cleared up to Nyanga station. The latest relocation, which began in December, is part of the plan to reinstate the remainder of the line, to Mitchells Plain and Khayelitsha.

Boost for jobseekers

Premier Alan Winde recently announced that the province has partnered with the private sector to help unemployed jobseekers find work. The Getting You to Work initiative offers jobseekers free travel to interviews using GABS.

The initiative is available only in Cape Town.

Mackenzie said the initiative is available during off-peak periods when there is spare capacity on buses, so there is no additional cost to the province.

“The Department will pay for the Gold Cards issued to beneficiaries (R35 plus the admin fee), allowing them to access the free services. Payment is dependent on the number of beneficiaries that take up the opportunity.

“This initiative is a pilot project intended to test the concept of providing free travel vouchers to jobseekers. Cape Town has the highest unemployment rate and unemployed population in the province, so it was selected as the location for the pilot. Expansion to areas outside Cape Town will be considered based on the outcomes and lessons learned from the pilot project,” he said. DM

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