The effect of governmental subsidies and the contractual model on the publicly-owned bus sector in Japan

The publicly-owned municipal bus sector that provides local transport in Japan is in a difficult situation because of operating deficits, inefficient operations and management, and budgetary constraints of expanding subsidies, and thus, it needs to be restructured to improve efficiency. This paper investigates the impact of subsidies and contractual settings on the cost structure of the publicly-owned bus sector in Japan. A trans-log cost function has been estimated by pooling cross-sectional data of 527 observations over the time period of 1990-2006 for a cross-section of 31 publicly-owned transport companies in Japan. Our analytical results confirm that governmental subsidies to this sector negatively affect the cost structure, while the contractual model may have a positive impact. We also discuss the implications of these results for Japan’s public transport policy.     

The conflict between competition policy and the wider role of the local bus industry in Britain

Since the Transport Act of 1985, the local bus industry in Britain (outside London and Northern Ireland) has been subject to deregulation, removing previous restrictions on routes, service levels and fares. This also marked a reversal of the previous emphasis on co-ordination of services provided by different operators, and introduced competition law as applying to other industries to the local bus sector. This has been in conflict with other policy objectives aimed at stimulating greater use of public transport, such as harmonisation of ticketing systems. The underlying issues are examined, and recent changes in policy. The Local Transport Act of 2008 offers an opportunity to resolve some of these problems, and its application in Oxford is discussed as the first substantial example to date. However, a strong conflict remains between the role of competition agencies and other aspects of policy.     

Is the bus transport contracting system in South Africa leading to trusting relationships between contracted parties? An analysis of funding issues and the impact on relations between government and operators

The 1996 South African White Paper on National Transport policy provided the guidelines for the restructuring of the commuter bus industry. The restructuring objectives were based on improving the competitiveness of and service levels within the industry through a competitive tendering regime, the selective implementation of negotiated contracts and the general transformation of the industry to also include improved transparency in the funding arrangements between government and operators.In order to set the context of the paper, a brief overview is provided of the progress made with policy implementation and the background to funding issues that are experienced in the bus transport sector. To gauge the impact of the funding issues on the relationship between government and operators, a survey of the largest contracted operators was undertaken to determine, amongst other, how these funding issues have potentially impacted on trusting relationships between contracted parties.     

Comparing operator and users costs of light rail, heavy rail and bus rapid transit over a radial public transport network

A model to compare three alternative forms of public transport - light rail, heavy rail and bus rapid transit - is developed for an urban network with radial lines emanating from the borders to the city centre. The theoretical framework assumes an operation aimed at minimising the total cost associated with public transport service provision, which encompasses both operator and users costs. The decision variables are the number of lines (network density) and the frequency per period for each mode. This approach has no prejudices a priori in respect of whether a specified delivery scenario is aligned with existing modal reputation. Rather, we establish the conditions under which a specific transit mode should be preferred to another in terms of the operator (supply) and user (demand) side offerings. The model is applied using data from Australian cities, suggesting that in most of the scenarios analysed a high standard bus service is the most cost-effective mode, because it provides lower operator costs (infrastructure, rolling stock and operating cost), access time costs (due to a larger number of lines) and waiting time cost (due to larger frequencies of operation). A rail mode, such as light rail or heavy rail, may have a lower total cost only if it is able to run faster than bus rapid transit, and the difference in speed is enough to outweigh the bus advantage on operator cost and access and waiting times.     

Engaging the paratransit sector in Cape Town on public transport reform: Progress,process and risks

The South African government in 2006 initiated an urban public transport reform programme reliant on the introduction of new bus rapid transit (BRT) systems. Affected paratransit operators can opt to be incorporated in these systems by forming new operating companies, but must withdraw their existing services from proposed routes. Cape Town's first phase of BRT operations came online in 2011, and operator engagement has focussed on this phase. The attitudes within this city's paratransit sector in relation to future phases, and to the broader reform policy, remain largely untested. In view of this sector's past resistance to government-led proposals, and the current phase avoiding areas with the highest concentrations of operators, the current engagement process's outcomes may not be adequate indicators of future prospects.     

Overview of public transport policy developments in South Africa

In South Africa, a restructuring of the public transport system is currently under way. In the bus industry the tender for contract system is being implemented, the commuter rail sector is being recapitalised and the minibus taxi industry recapitalization programme is in its early stages. Progress with policy implementation across the modes of transport, modal split trends and issues that hamper the full development of the public transport industry are discussed in this paper. Medium to long term policy and strategy initiatives that will further inform the development of the industry are also highlighted in this chapter.     

Regulation,trust and contractual incentives around transport contracts – Is there anything bus operators can learn from public air service contracts?

This paper compares recent experiences in contract negotiation and subsequent commitment in public air services with the bus industry. The heart of the paper is a survey of European and Australian regional airlines, which we mirror with revealed experiences of bus operators. We aim to identify a number of elements in the contracting regimes that have exposed ambiguity and significant gaps in what the principal (e.g., transport department) expected, and what the agent (airline or bus operator) believed they were obliged to deliver. Ultimately airline and bus services are similar in that public authorities procure transport services that are desirable for the society but would be unprofitable without government involvement. In both sectors (theoretically fairly similar) public transport contracts are used, and those usually include obligations and performance measurements. In terms of similarities, one of the surveyed contract details that had a perceived high clarity in both industries was “payment procedures” and amongst those with rather poor clarity was also in both industries “incentives to improve performance and grow patronage”. We also show differences between regional air services and bus operations with regard to performance measurement and pre-specified obligations. Because of the strong safety culture around air services we find that regulation and trusting partnerships are even more important to aviation than to the bus sector. Because of the high level of trust but also because of simpler and more complete contracts in aviation, there is much less (re-)negotiation going on compared to the bus operations.     

Alternative financing for Bus Rapid Transit (BRT): The case of Porto Alegre, Brazil

In the 1970s, Brazil was leading the implementation of high-flow bus priority schemes, but now cities are less capable of financing public infrastructures. This paper explores the private sector participation in the provision of transit infrastructure based on Public-Private Partnerships (PPP) for Bus Rapid Transit (BRT). The Porto Alegre BRT contemplates interchange terminals planned to accommodate retail and service activities. It is expected that these areas shall generate enough revenues to remunerate private investors, under a PPP scheme, for the construction of terminals and part of the infrastructure required to upgrade some sections of the existing busways to BRT standards.     

Port reform in Australia: regulation constraints on efficiency

Privatization and corporatization of ports in Australia has meant the transfer of government-owned monopolies to privately owned monopolies. This has required the introduction of a regulatory regime to protect the interests of users as in some cases the privatized terminal owner or operator is also a customer of that facility. A complex regulatory regime for ports at the commonwealth and state government levels has, as a result, been created. This has meant that pricing policies and reinvestment strategies are constrained by the regulator. Inefficiencies and disruptions are likely to occur. This paper examines the regulatory regimes in place—the role of the state government regulator, the Queensland Competition Authority, and that of the Australian Competition and Consumer Commission, the national regulator. It will examine the impacts and constraints these have imposed on coal terminal expansion and operations. Recommendations have been made suggesting the transfer of state government ports to a single national regulator. This paper examines whether the proposed regulatory overhaul will resolve the dilemma of the Goonyella coal supply chain. It will argue that while regulation rationalization and overhaul will expedite the complex regulatory process, the solution lies with an integrated approach to the entire supply chain rather than the port focus.     

Comparisons of urban transport sustainability: Lessons from West and North Africa

The diagnosis for urban transport sustainability depends on the context of different regions worldwide. We focus in this paper on West and North Africa which reveal similarities but also structural differences which are explored further. The importance of paratransit in its various forms is strongly observed in sub-Saharan Africa and to a lesser extent in North Africa. The attempts to regulate and organise this sector have been difficult; one interesting experience in Dakar occurred during a programme of fleet renewal. In parallel it is observed that there are positive but insufficient experiences of public transport authorities in some cities (Dakar, Abidjan) and similar projects postponed in other cities because of the institutional problems. One also observes the constant difficulties of designing sustainable schemes for bus companies. An answer to this crisis has been found in North Africa, through investment in new mass transport systems. However, mass transport projects in West Africa are very weak in comparison. The gap between public transport costs and income levels there remains a major obstacle to sustainable mobility exacerbated by the poverty of a significant part of the urban population in West Africa. Two other critical factors are also identified affecting sustainable mobility requirements, namely, the urban sprawl and increasing energy costs. Finally the conclusion recommends the use of research and expertise networks in order to help the design and the implementation of suited solutions.     

Goal achievement with trusting partnerships at the tactical level

Recent Thredbo Conferences have begun to explore the importance of the relationship between public transport service purchaser and provider in the development of successful public transport services. However, practical examples to test the trusting partnership model are rare. Bus service planning and delivery in Melbourne, Australia, has pioneered the trusting partnership approach, from agreement about desirable service standards and requisite operator qualifications (at the Tactical level) to detailed service delivery contracts. New negotiated performance-based metropolitan bus contracts commenced in January 2009, embodying principles discussed in previous Thredbo Conferences. This paper reports on the Tactical planning process that agreed service standards and the subsequent contract negotiation process, reflecting a trusting partnership between purchaser and provider, while remaining transparent and accountable and maintaining performance pressure on the provider. It shows how patronage growth rates have increased dramatically and identifies areas where further enhancements should be explored in the contracting area.     

Incorporation of customer satisfaction in public transport contracts – A preliminary analysis

The design of public transport contracts provides an opportunity to define service quality standards to which an operator can be held accountable. While the specification of service quality standards is a common practice, the relationships between the specifications and customer satisfaction are often methodologically unclear. Based on a South African case study, the paper uses data collected from a group of passengers who have personal cars but choose to use public transport, and a control group of passengers who only use their cars, in the same corridor as the user group, to estimate a service quality conjoint model. The model is used to evaluate the effect of different public transport service packages, defined in terms of different combinations of service attributes, on passenger satisfaction. The paper confirms the need to classify service attributes in terms of their relative impact on passenger satisfaction, at the service design stages, where performance in respect of some attributes has a disproportionate impact on satisfaction, especially where public transport is competing directly with private transport. Practical applications and limitations of the methodology are also discussed.     

Incompleteness and clarity in bus contracts: Identifying the nature of the ex ante and ex post perceptual divide

In the transport sector, many types of contracts exist. Some are very precise, and strive for completeness; others are very ‘light-weight’ and are incomplete. Bus and coach contracts, won through competitive tendering or negotiation, are typically incomplete in the sense of an inability to verify all the relevant obligations, as articulated through a set of deliverables. This paper draws on recent experiences in contract negotiation, and subsequent commitment in the bus sector, to identify what elements of the contracting regime have exposed ambiguity and significant gaps in what the principal expected, and what the agent believed they were obliged to deliver. We develop a series of regression models to investigate the extent of discrepancy between the principal and the agents perceived ‘understanding’ of contract obligations. The empirical evidence, from a sample of bus operators, is used to identify the extent of perceived incompleteness and clarity across a sample of bus contracts. A noteworthy finding is the important role that a trusting partnership plays in reducing the barriers to establishing greater clarity of contract specification and obligations, and in recognition of the degree of contract completeness.     

The regulatory cycle stalled? An assessment of current institutional obstacles to regulatory reform in the provision of road-based public transport in Cape Town, South Africa

Wide-ranging and ambitious proposals for the comprehensive transformation of public transport systems in major South African cities, including Cape Town, have now been in play for a decade or more since the country’s post-apartheid transition. To date, progress in implementing such proposals has been, at best, much delayed and, in Cape Town, appears to have stalled, and may now be significantly compromised. This paper draws on aspects of the concept of regulatory cycles in the bus transport sector to explore some of the key factors which have given rise to this situation, focusing primarily on obstacles embedded in the present institutional framework which governs the provision of road-based public transport in the city. It specifically identifies difficulties in establishing an appropriately mandated and resourced agency at the local level to drive forward the transformation project and the sustained opposition of existing, largely ‘self-regulated’ minibus-taxi operators as key factors which have obstructed the introduction of the proposed regime of ‘regulated competition’. A tentative conclusion is offered to the effect that perhaps a partial or ‘hybrid’ transformation of the public transport system may be the best - and, indeed, possibly the most appropriate - outcome of the transformation process that can be anticipated under the present and foreseeable future circumstances prevailing in the city.     

A journey from adversary to partnership bus reform in NSW

This paper continues to debate the importance of understanding in the NSW Bus reform process of the relationship between central agencies, service providers, the academic community, key consultants and contractors within the setting of the transport service organisation framework. Sydney is a modern city with heavy rail, light-rail, monorail and an extensive Harbour, with bus services owned by Government as well as private interests. The paper addresses the case for reforms, the approach taken, competition policy, the subsequent development of partnerships, performance of the regulator, passenger benefits, growth and the differences between Metropolitan/Outer Metropolitan and Regional and Rural bus services.     

Competition in Brazilian bus and coach services - The results of recent competitive tendering processes

This paper analyses the terms and the results of a sample of some recent Brazilian bidding processes for the concession of public passenger transport services: namely, urban and metropolitan bus or regional coach services. The analysis is based on selected issues relating to competitiveness and upon the legal framework that applies in this sector. It was concluded that, given the lack of bidding processes for concessions in the bus and coach sector in Brazil, the fact that some bidding processes have been carried out should be considered a sign of progress. However, these auctions have not necessarily prioritised competitiveness, since many barriers to entry into the systems were imposed by the bidding terms. Future competitive tendering processes should seek to abide by stricter principles of competitiveness, if they wish to avoid the entire effort expended on conducting such processes serving only to mask nothing more than formal obedience to the law and to discredit the bidding process in the eyes of Brazilian citizens.     

Methodology for calculating passenger capacity in bus rapid transit systems: Application to the TransMilenio system in Bogotá, Colombia

Transit textbooks and engineering manuals indicate that the capacity of Bus Rapid Transit –BRT – systems does not exceed 20,000 passengers per hour per direction. The implementation of the TransMilenio BRT System, in Bogotá, Colombia, showed that the systematic combination of multiple platforms at stations, overtaking lanes, level boarding, prepayment, large buses with multiple doors, express and local services, and traffic engineering measures at intersections, allow for very large passenger throughput. Measurements indicate actual throughput of 43,000 passengers per hour per direction with average bus occupancy of 150 passengers per articulated bus, and a commercial speed of 22–24 km/h. According to special formulas developed for the analysis of high capacity BRT corridors, the critical section of TransMilenio has a practical capacity of 48,000 passengers per hour per direction with its existing infrastructure and 150 passengers per bus – 35,000 passengers per hour per direction with 110 passengers per bus. Changes in existing infrastructure, such as additional platforms, higher capacity vehicles, non-grade facilities at critical intersections, among other improvements, may increase the capacity, speed, reliability and quality of service of the system.     

Does the political and economic context influence the success of a transport project? An analysis of transport public-private partnerships

The construction and provision of infrastructure services such as transport nowadays is often based on a partnership between three main actors: public sector, private sector and multilateral lenders, under a framework of Public-Private Partnerships (PPPs). This type of partnership has been employed in a wide range of projects in the transport sector and in various contexts in developing and developed countries. Given this observation, the objective of this paper is to examine how countries’ economic and political characteristics contribute to the success of PPPs in transport investments. Special focus in the analysis is given to how the perception of corruption and democratic accountability may influence the success of a PPP project in different transport sectors. We examine a database with 856 transport PPP projects using a generalized linear model in the form of a logit model in order to evaluate the transport database covering data from 72 countries, classified in six regions. The study highlights the importance of national experience. Not only does national macroeconomic experience appear to have a relevant role, but so also does its past experience (either positive or negative) of transport PPP projects. An interesting finding from the analysis is the importance of the rest of the world’s perception of a country’s level of corruption and democratic accountability for the final outcome of a PPP project.     

Strategies of state and local government in management of urban transport problems – A case of Delhi

In India, different layers of Government control different policy instruments to tackle transport externalities which might result in coordination problems and possible efficiency losses. This paper, therefore, addresses the coordination problem resulting from the division of policy instruments between two different government levels that face different types of externalities in varying degrees of magnitude in the urban transport sector by developing three types of theoretical models: the Full Control Centralised Model where the state government has full control over all pricing instrument; a Nash equilibrium model where each of the government levels controls only one instrument and takes the behaviour of the other as given; and a Stackelberg equilibrium mode where the behaviour of the state government is influenced by the fact that one of the price instruments is controlled by the local government. With an empirical illustration of the model for Delhi, the paper finds that since there are many interactions and many externalities between the two levels of government, a division of roles between them does not guarantee an efficient pricing outcome and the efficiency of pricing would depend on the institutional set up and on the correspondence between the objective functions of the two government levels.     

An assessment of port reform in Argentina: outcomes and challenges ahead

During the 1990s Argentina engaged in a process of restructuring and deregulation of its ports. The main objective of the reform was to increase efficiency and service quality and to reduce the size and role of the public sector in ports. Overall, it was expected to allow the transport sector to adjust its capacity to demand changes and to facilitate international trade while contributing to the reduction of the fiscal burden of this sector. This paper shows that the reform caused significant efficiency gains, allowing a 50% drop in container terminal handling price within five years in the most important ports. The paper also identifies outstanding issues that could impact the long-run sustainability of the gains achieved. Among these issues, emphasis is given to recent horizontal and vertical mergers in the Port of Buenos Aires and their consequences in terms of actual competition and access regulation.