LTFRB issues formula on PUV fares

MANILA, Philippines — The Land Transportation Franchising and Regulatory Board (LTFRB) has finalized a formula on fare adjustments for public utility vehicles (PUVs) based on pump price movements, thus doing away with the need to file an appeal or  consult the public before changing fares.

The said formula, as indicated in Memorandum Circular (MC) No. 2019-35, was signed on July 26 by the board and will henceforth serve as its standard in adjusting fares for PUVs.

The approved new matrix came seven months after Transportation Secretary Arthur Tugade ordered the LTFRB to come up with an automatic fare adjustment formula when the board approved four different fare movements in less than six months, on the heels of fluctuating oil prices.

Deciding factors

The formula takes into consideration changes in oil prices and the share of fuel costs in the drivers’ total expenses—also the same factors often considered by the board when approving a hike.

The operational costs shall be determined by the board via surveys and studies on the public land transportation service, according to the MC.

For example, the board may estimate that fuel costs currently account for 35 percent of a jeepney driver’s total cost.

New adjustment

Given the current base fare (P9 and P1.40 per succeeding kilometer), and if the current price of fuel were to rise by 10 percent, then the new adjustment would be computed as such: 9[1+(.10)(.35)] + 1.40[1+(.10)(.35)] = P9.315 (base fare) + P1.449 (per succeeding km).

Pasang Masda president Obet Martin, who was among those who lobbied for the matrix, said this formulation meant that there would only be fare adjustments if the changes were to fall within increments of 5 or 10-percentage points.

“It’s not like you would have to adjust the fares every day, or even every week,” he said. “The changes have to fall within a bracket for it to take effect.”

This also means that drivers and operators will no longer need to appeal for fare adjustments, which often take years and are costly, he added.

But other transport groups slammed the formula-based matrix for supposedly removing checks and balances in regulating public transport fares.

By institutionalizing a fare adjustment formula, the LTFRB can now increase or roll back the fares “without the need for public hearings and other special proceedings,” according to the MC.

‘Fare deregulation’

Piston president emeritus George San Mateo said the formula “was clear evidence of deregulating public transport fares.”

“The problem here is that because of deregulation and overpricing in oil prices, hikes are always much higher than oil price rollbacks, so we are more than likely to experience an unabated rise in fares,” he said.

Echoing his statement,  Association of Concerned Transport Organizations (Acto) president Efren de Luna said the lack of public consultation would remove checks and balances in runaway adjustments.

“Even though it was an arduous process, having public hearings and consultations are important to be able to hear not just the side of the driver-operators but also of the commuters. By acting on a formula-based adjustment, it removes the voice of the commuters, who are going to unduly suffer the brunt of this new policy,” he said.