Soaring diesel costs threaten survival of bus, ferry operators

An industry figure has said reducing the number of daily trips to Langkawi is necessary for ferry companies’ survival. - NSTP FILE PIC

KUALA LUMPUR: The sharp rise in diesel price to RM5.52 per litre is putting a huge strain on Malaysia's transport sector, with bus and ferry operators warning that soaring fuel costs and subsidy gaps are threatening their ability to remain afloat.

Industry players say the impact is being felt on the ground, with operators cutting services, grappling with liquidity problems and struggling to absorb higher operating expenses.

In Langkawi, a ferry operator has already reduced daily trips to the island from five to three to keep operations viable after industrial diesel prices surged by more than 100 per cent.

Ferry Line Ventures Sdn Bhd general manager Dr Baharin Baharom said the move was unavoidable to ensure the company's survival.

"Reducing trips is not an option but a necessity to ensure the company can continue operating," he said in a statement yesterday.

Baharin acknowledged that some members of the public had expressed dissatisfaction, believing that the decision was profit-driven, but he stressed that ferry fares to Langkawi remained among the lowest in the country.

He said fares averaged about 88 sen per nautical mile, significantly lower than routes to islands such as Pulau Tioman and Pulau Pangkor, which could reach RM2 per nautical mile.

The strain is also being felt across the bus industry.

Pan Malaysian Bus Operators Association president Datuk Ashfar Ali said while express bus operators received diesel subsidies under the Subsidised Diesel Control System, the mechanism was creating a liquidity crisis.

Some tour buses have ceased operations due to rising diesel prices and operating costs, leading to many bookings being cancelled. - NSTP/ZULIATY ZULKIFFLI

Under the system, operators are allocated a quota of 6,000 litres of diesel — extendable to 10,000 litres with support from the Land Public Transport Agency — at RM1.88 per litre.

However, companies must first pay the market price when refuelling and only receive the subsidy refund after their billing cycle ends.

"Every company has a credit account with fuel suppliers. When we refuel, the amount is deducted at the market price.

"The government only refunds the price difference after the individual company's statement date.

"This means our cash flow is constantly stuck until the end of the billing cycle. It is a significant burden for express bus operators who are already struggling," he told the New Straits Times.

The situation is even more severe for tourism, charter and worker bus operators, who are excluded from the subsidy scheme.

Malaysian School Bus Operators Federation president Mohd Rofik Mohd Yusof said the sudden diesel price jump had left operators' finances under severe strain.

"Tourism and charter buses don't get the subsidy. We accepted bookings as early as December and January based on the diesel cost of RM2.15.

"When the price suddenly jumps, it creates a crisis," he said.

Rofik said most customers were reluctant to accept revised prices even though operators' costs had surged.

"Some customers are understanding, but 99 per cent question why they have to pay more when a price was already agreed upon.

"We just want the government to give some attention to tourism and charter buses during this period of sudden price hikes."

He added that operators in the northern zone and east coast were planning press conferences to raise the issue publicly.

Beyond fuel costs, operators are also facing a "domino effect" of rising expenses for imported spare parts, including tyres, lubricants and batteries.

Ashfar said many of these items were petroleum-based or imported, making them vulnerable to global price fluctuations.

The industry is also contending with a 20 per cent to 30 per cent drop in passenger volume following the festive travel period.

Yesterday, amid the rising pressure, the government announced additional assistance to cushion the impact of fuel price increases.

Cash aid under the Budi Diesel programmes — Budi Individu and Budi Agri-Komoditi — had been increased by RM100 to RM300 from March 17.

The Finance Ministry, in a social media post, said the enhanced assistance was intended to ease the burden on diesel users, particularly those in the agriculture and transport sectors.

At the same time, the price of subsidised RON95 petrol remains capped at RM1.99 per litre under the government's fuel subsidy strategy. - NST