ON March 24, 2026, the Department of Transportation urged lawmakers to provide a budget for the service contracting program so that more public transport free rides could be offered “libreng sakay.” Service contracting is the right idea, but not free rides. And service contracting is not “libreng sakay.”
There are several reasons why I am not in favor of “libreng sakay” at this time. If the budget is limited (and we know it is), the free service only lasts until funds run out. If fares are collected and only a partial subsidy is provided, the budget can be stretched and the service can be sustained for a longer time. Or a similar subsidy can be offered to more routes. There may be several unintended, undesirable consequences from offering free rides. Let me explain.
Service contracting is about delivering reliable, high-quality services on priority routes. There are two basic types of service contracting, both generally associated with collecting a fare: “net cost service contracting” where a partial subsidy is provided to the transport operator while the operator is permitted to collect and earn fare revenue; and “gross cost service contracting” where the transport operator is compensated for the full cost of providing the service plus a reasonable profit while a separate agency receives the fare revenue and absorbs the financial risk. Service contracting recognizes that public transport is an essential service and should operate with regularity in good and bad times.
Under service contracting, contracts are usually performance-based, with outputs monitored using GPS-based vehicle tracking, fare collection data, CCTV cameras and passenger surveys. There is an agreed service plan with measurable performance standards, including bonuses for good performance and penalties when services are deficient. This ensures that the transport operator is motivated to deliver quality services. Gross cost service contracting also helps to avoid risky and inefficient “on-street” competition for passengers; when payments to operators are not linked to passenger numbers, drivers have no incentive to linger at stops or to chase after passengers.
Where you find high quality bus services, a service contracting approach is likely to be involved. London, even with its dense underground rail network, operates over 8,000 red double-decker buses under five- to seven-year service contracts with private bus operators. Singapore bus services move about 3.6 million people daily using close to 4,000 buses, all on service contracts. In both cases, fares are collected by public transport agencies and are used to pay for the cost of the service contracts.
At a time when government budget resources are limited, it is short-sighted and imprudent to offer “libreng sakay.” If the government has a service contracting budget of P500 million earmarked, for example, for the EDSA Busway, it would have to spend P8 million a day for 400 buses, each paid, say, P20,000 daily, assuming all rides are free. This budget would be good only for 63 days. If the DOTr allowed the buses to continue collecting fares while providing a smaller daily subsidy per bus of P8,000, the daily subsidy cost for 400 buses would be only P3.2 million. A budget of P500 million could last 156 days.
“Libreng sakay” on the EDSA Carousel or other major routes may also create more harm than good. Regular public transport services (bus, jeepney and UV Express) could end up with fewer passengers and less income because part of their passenger base would be attracted to use the free rides. This could generate resentment from most of the public transport industry who continue to rely on fare income.
If all the income of transport operators is paid out of government coffers, another problem is the speed and regularity of payment. When there are long delays before payment is released, some operators may not have the cash on hand to keep their units in operation.
Moreover, free rides on major routes like the EDSA Carousel will surely generate longer queues and heavier crowding. Longer queues and less reliable service may compel some carousel users to abandon public transport and shift to using a private vehicle — not the result that we want.
Finally, shifting a route to “libreng sakay” may result in a reduced level of service or no service at all during off-peak and late-night periods. Prior to the energy crisis, the EDSA Busway operated 24/7 and was an important lifeline for workers on late-night shifts. Under “libreng sakay,” bus operators may focus on delivering free services during daytime hours, leaving the busway with fewer units or completely abandoned during the night when many Filipinos still need to move around.
Most commuters, I believe, would prefer shorter queues and better service in exchange for paying normal fares. The highest cost that commuters pay is when a service is no longer reliable, convenient or available.
Robert Y. Siy is a development economist, city and regional planner and public transport advocate. He can be reached at mobilitymatters.ph@yahoo.com or followed on Twitter @RobertRsiy.
