THE Government calls it "premium fares". The term describes the higher charges that are levied on riders of the North-east MRT Line (NEL).

The five to 25-cent "premium" is to offset the higher cost of operating a fully-underground driverless train system. So says the official line.

"Premium fares" are likely to apply to the new Circle Line (CCL), which starts operating on May 30. It too is fully underground and driverless.

The CCL is operated by SMRT Corp and the NEL by SBS Transit.

I recall chatting with SMRT executives about "premium fares" when the NEL opened in 2003. They were flabbergasted, and said that their north-south and east-west lines also incurred costs such as air-conditioning, screen doors, ventilation and lighting – expenses cited for the NEL's "premium fares".

Not only that, SMRT had to hire drivers for their trains. But now, it looks like SMRT too will get to enjoy premium charges.

Commuters will have no choice but to pay up. Even if the CCL's completion is years behind schedule. Even if the section of the line that opens on May 30 consists merely of five stops.

The Public Transport Council, a transport watchdog set up by the Government, is unlikely to object to the CCL's "premium fares". After all, precedence has already been set by the NEL.

The council will be making a huge misstep if it takes this path of least resistance.

For one, it will undo the goodwill it built last month when it effected a two-cent reduction in bus and train fares to help commuters weather the worsening downturn.

The paltry reduction, which takes effect April 1, will be hollower to commuters who have to stomach "premium fares".

The council should take this opportunity to undo this most unpalatable notion. To the commuter, there is nothing "premium" about the NEL or CCL if they discount the million-dollar art installations gracing their stations.

Fully underground MRT lines free up land, a scarce commodity in Singapore. The Government makes billions when it sells land above these lines. Often, the land sales pay for the cost of the entire line.

So, if an operator does indeed incur higher costs in running a fully-underground line, perhaps the extra expenditure – if it can be substantiated – should be subsidised by grants.

Transport Minister Raymond Lim made a landmark announcement in January 2008 that may have some relevance to the issue of "premium fares". He said that the decision to build a new rail line will no longer hinge on whether it can be commercially viable on its own.

Instead, the Government will go ahead with new lines as long as the entire network remains viable.

"Premium fares" however flies in the face of this newfound principle. By allowing "premium fares", we are reverting to the old thinking of allowing each line to be a stand-alone profit centre.

And it just makes my blood boil. The same way that certain taxis are allowed to charge higher flagdown fares.

These higher flagdowns date back to the 1990s, when the first Mercedes-Benz cabs started plying. Premium fares for a ride in a Merc – that's fair enough. But today, Korean cabs, Czech cabs and certain run-of-the-mill Japanese cabs are allowed to levy higher flagdowns.

The reasons range from these vehicles having automatic transmissions to them being "greener". Incidentally, the "greener" cabs already had a sizeable "green" rebate from the Government when they were registered.

Some of them also run on cheaper fuel, such as natural gas. So why are they still charging higher fares?

There was a time when such a practice would come under the scrutiny of the PTC. But no more.

The taxi industry has long been deregulated. Taxi commuters probably have a choice – they can bypass a Korean cab and wait for a Toyota Crown if they do not wish to pay more.

But there is no such luxury for the CCL or NEL commuter.