Transport state enterprises: the Canadian experience

Abstract

In most economies, the ownership and control of state enterprises has been an important government policy instrument. This has been particularly true in the transportation sector in which governments have intervened extensively through the acquisition and creation of state enterprises. While the genesis of and rationale for transportation state enterprises have varied from country to country and even from time to time within each country, at present, most governments do exercise a significant degree of ownership and control in transportation. Some of these enterprises enjoy monopoly status and others are in competition with and behave similarly to their private sector counterparts.

Consequently, and in recent years, questions have been raised about government intervention in the market‐place as it relates to effective management control and accountability of state enterprises. Questions have also been raised about the continuing need for transportation state enterprises and some governments have promoted some form of divestiture (privatization).

This paper addresses the accountability and control of transportation state enterprises based on the Canadian experience. It discusses their role and policies related to diversification, financing and divestiture, and the need for development of a performance framework.     

Retrospect and prospect of public transit privatization in China

As the most populous country in the world with a heavy reliance on public transit, China's public transit privatization has a global significance. China's post‐Mao economic reform and establishment of market‐oriented economy have stimulated its public transit privatization at a very fast pace. The largest Chinese cities have been spearheading the implementation of different privatization measures, such as granting franchises, company merger, company reorganization, public/private partnership, responsibility systems, and many others. All these privatization efforts have yielded preliminary successful results, even though some obstacles are encountered. In the future, new privatization‐related laws are expected to be enacted, government functions and business functions would be further separated, privatizing other public transit services besides operation would take place, and some negative impacts associated with privatization would be mitigated.     

Organizational and Ownership Transformation in Poland’s Urban Transport Companies

Abstract

This paper seeks to reconstruct the organizational and ownership transformation involving Poland’s urban transport that companies passed through after 1990. Data collected from various sources (above all the Internet, including the Bulletins of Public Information) were used to establish the degree of advancement of the transformation processes. Despite the passage of nearly two decades since the new economic reforms were launched, the privatization processes involving enterprises of municipal origin are not well‐advanced. There is not a single private company among the organizers of urban transport. Instead, an absolute domination of budgetary‐sphere entities may be noted. Furthermore, there are seven transport municipal unions. Among the operators (carriers) public ownership remains dominant in the form of single‐person local authority companies, local government companies, municipal union ownerships, municipal companies as well as budgetary units. Privatization processes have encompassed fewer than 10% of all operators in the form of companies with foreign participation, workers’ companies and companies with Polish non‐public sector participation. Moreover, in 20 localities urban transport is supplied by multi‐trade municipal services enterprises (as of end‐2008). Thus, transformation processes, though started earlier than in the case of Poland’s State Road Transport coach companies, are much less advanced.     

Restructuring the Lebanese Railway and Public Transport Authority (RPTA): From losing operator to effective regulator

The Lebanese Council of Ministers has recently endorsed a plan for the reform and organization of the Land Public Transport Sector (LPTS). The plan implies a new role for the government: it would cease being just a loss-making service provider and become the planner and regulator of the sector under a new strategy. The strategy would aim at creating the enabling environment and conditions that allow and ensure the existence of sufficient, affordable and efficient transport services provided by several private-sector operators functioning under competitive conditions. Thus, the existing autonomous Railway and Public Transport Authority (RPTA) will be restructured to serve as the effective regulator, its bus operations will be corporatized (for possible eventual privatization), and all existing private sector service providers will be regulated. Following a brief overview of the problems of the sector and the components of the reform and organization plan, this paper focuses on developing options for the restructuring of the RPTA to carry out its new role.     

What Happened to the National Road Carrier in a Post‐Communist Country? The Case of Poland's State Road Transport

Abstract

The purpose of this article is to seek to reconstruct the ownership transformation involving Poland's State Road Transport (PKS) companies passed through after 1990. Data collected from various sources (above all the Internet) were used to establish the degree of advancement of the transformation processes. Despite the passage of 18 years since the new economic reforms were launched, privatization processes are not well advanced. State ownership remains dominant, in the form of Treasury companies as well as state‐owned enterprises. Privatization processes have encompassed fewer than half of all firms, the most popular form taken (in about a quarter of all analysed cases) involving leasing by workers. This would seem of major interest, attesting as it does to the greater activity of some worker's teams, as well as the passive role of the state in privatization processes. A much smaller number of firms (26) have been purchased by external investors, the only important international concern among these being Veolia, which had taken control of 11 PKS companies as of mid‐2006. By and large, it is the firms carrying passengers or passenger and goods that are in a much better situation, as opposed to the companies that are commodity‐carriers only. The majority of the latter have collapsed, or have undergone the kind of privatization that involves simultaneous shutdown. Mixed passenger and goods carriers have had to reduce their level of activity in commodity transport.     

Modelling emission control taxes in port areas and port privatization levels in port competition and co-operation sub-games

Using a game theory approach, this paper analyses a situation in which the government imposes a certain emission tax on vessels and port operations for emission control in port areas. Two ports are considered: a purely private port and a landlord (partial public) port. These two ports are in Cournot or Bertrand competition or cooperation with differentiated service. Our model outcomes lead to the following conclusions. First, the optimal private level of port 2 under Cournot and Bertrand competitions varies between fully private and highly public concerned port, while government will prefer a highly public concerned or close to highly public concerned port in the cooperation scenario. Second, government will have to make more and stricter efforts to enhance environmental protection in the situation of port cooperation (monopoly) than in the case of inter-port competition, and all the optimal emission tax should be always lower than the marginal emission damage. Third, port privatization has a non-monotonous effect on ports’ environmental damage in the inter-port competition scenarios and a monotonous decreasing effect in the cooperation scenario. Fourth, the total emission tax revenue is always higher than the overall environmental damage in the cooperative scenario, and it may or may not be able to cover the whole environment damage in Cournot and Bertrand competitions. Finally, the government may face a trade-off among environmental protection, maximizing social welfare, satisfying individual motivation, when considering port cooperation (monopoly).     

Net tax incidence for urban public transit subsidies in New Zealand

This paper examines the impact of policy changes in the funding of New Zealand public transit modes.These changes, introduced in 1983, are evaluated in terms of the net incidence of public transit subsidy assistance, taking into account its source of funding and the income class of those commuters benefiting from the subsidy. The general conclusion is that the net incidence of subsidy assistance remains progressive (i.e., a transfer from high to low income commuters) following the introduction of shared funding on the predominant public transit modes (rail and bus), sourced from income tax (central government) and property tax (regional/local government). However, because of the predominance of medium to high income commuters on rail vis-a-vis bus and the traditional source of funding on these modes in terms of income tax (a progressive tax source) and property tax (a regressive tax source), the degree of progressivity previously associated with public transit subsidies has now substantially reduced.The analysis and opinions expressed in this paper are the responsibility of the author alone and do not purport to represent the views of the Ministry of Transport.     

Park and ride facilities on light rail transit systems

There is now considerable interest in exploring the idea of strategic park and ride as a means of promoting the use of rail transit and encouraging a transfer of commuters from car to public transport. This is especially evident in North America, where extensive park and ride facilities have been installed on a number of light and heavy urban rail systems. There is a general consensus about the most suitable types of location for facilities, but less agreement on the development of a reliable method of forecasting demand and also on the required size of sites. Experience in practice indicates that although park and ride is attractive to commuters, schemes do not generally result in lasting reductions in highway congestion, due to rising car ownership and use and the phenomenon of generated traffic.Abbreviations Centro West Midlands Passenger Transport Executive - K&R Kiss and ride - LRT Light Rail Transit - PT Public Transport - RT Rapid Transit - TRRL Transport & Road Research Laboratory, UK     

On measuring the efficiency of public enterprises: Bus operating companies in the San Francisco Bay area

It is important to be able to say whether or not an enterprise in the public sector is efficient and to measure this aspect of its performance. Public enterprises sometimes have legitimate reason to treat efficiency as secondary, but they also may resist efficiency measurement for other reasons.Statistical cost functions containing experience from similar enterprises provide useful yardsticks for public administrators. A purported cost function can be inadequate, however, as is shown in one example.Statistical cost functions allow comparison of bus properties by giving a range within which costs of an efficient property should fall. While random influences cannot be excluded, if observed costs fall outside two standard errors of prediction, there is a good case to say the property is inefficient. The usefulness of the standard error of prediciton as a measure of precision is explored.Nationally estimated cost functions were used to investigate the bus operations only of three San Francisco companies. Two were found within sampling error, one was significantly more costly on its motorbus operations than average experience in the nation. A closer look would then be in order by those funding this property. Several years' experience is explored showing changes over time as well as across companies.This material was prepared with the support of National Science Foundation Grant No. GI-37181 to the University of California. The results and views are the independent product of university research and are not necessarily concurred in by the National Science Foundation. The Institute of Urban and Regional Development at U.C. Berkeley facilitated research herein.     

Subsidizing and pricing private toll roads with noncontractible service quality: A relational contract approach

In private toll roads, some elements of the private operator’s performance are noncontractible. As a result, the government cannot motivate the private operator to improve them through a formal contract but through a self-enforcing contract that both parties are unwilling to deviate unilaterally. In this paper, we use noncontractible service quality to capture these performance elements. By employing a relational contract approach, we aim to investigate the optimal subsidy plan to provide incentives for quality improvement. We show that government subsidy is feasible in quality improvement when the discount factor is sufficiently high and marginal cost of public funds is sufficiently small. Under feasible government subsidy, we have demonstrated the optimal subsidy plans in different scenarios. Moreover, some comparative statics are presented. Based on the derived subsidy plans, we further investigate the optimal toll price. We find that the optimal toll price generates zero surplus for the private operator and positive surplus for consumers. We then make two extensions of our model to re-investigate the government’s optimal decisions on subsidy plan and toll price when her decision sequence is changed and when government compensation is present upon termination of the relationship. Some implications for practice have been derived from our model results.     

Airport privatization in congested hub–spoke networks

This paper investigates the airport privatization issue. One congested hub and two linked local airports serve symmetric hub carriers. Passengers valuate the congestion delay cost and benefit from greater frequencies. The government considers privatizing either the hub or local airports. We find that in each privatizing scenario, welfare-maximizing public airport(s) set a charge below their operating costs in order to fully coordinate the high charge of privatized airport(s). If this fiscal deficit is not allowed, each scenario causes distortion. Interestingly, the distortion—and hence welfare losses—in privatizing a hub are smaller (larger) than those in privatizing both local airports when both passengers’ valuations are small (large); this is exactly the case when privatized local airports are strategic substitutes (complements). We also surprisingly find that retaining the hub airport as public and privatizing one or both local airports achieves the same market outcomes. We further find that if all airports are privatized, welfare becomes worse than the other scenarios; the hub airport charges lower (higher) prices than local airports when both local airports are strategic substitutes (complements).     

Highway and transportation planning in England

This article presents an overview of highway and transportation planning in England. It covers the division of responsibilities between central and local government; the organisation of the Department of Transport; the planning, financing and implementation of road schemes, both local and national. A very brief review of transport legislation is included.NOTE: This paper was printed before the UK General Election of May 1979. The Department of Transport is now responsible to the Minister of Transport. The Minister has similar responsibilities to those previously exercised by the Secretary of State for Transport as referred to in this paper. The views expressed in this paper are those of the writer and are not necessarily those of the Department of Transport.     

From ‘Our Air Is Not for Sale’ to ‘Airtrack’: The Part Privatization of the UK's Airspac

Air traffic in the UK has increased rapidly in the past two decades and is forecast to grow at a rate of 4.3% per annum between 1998 and 2020. The failure to develop the air traffic system in order to cope with this growth has had undesirable consequences, e.g. a rise in flight delays and near misses. Given the investment required in air traffic control systems to cater for this growth, the UK government in 2000 part privatized the National Air Traffic Services (NATS), the body in charge of the UK's airspace in a public–private partnership (PPP). The UK Airline Group acquired 46% of NATS and effective operational control, though the government retains a share in NATS and safety regulation is in the public sector. However, serious doubts about safety were raised during the debate on the PPP. Similar moves towards a commercial operation (i.e. corporatization) of air navigation services have been made in New Zealand and Canada over the past decade and these provide useful insights into the results of the corporatization process. This paper analyses the main issues surrounding the part privatization of NATS. First, it highlights the experience from New Zealand and Canada of the major issues involved in corporatized air navigation services in six different categories: funding, new technology and project management, safety, pricing regime, international opportunities, and customer responsiveness. The likely impacts for NATS given the lessons from New Zealand and Canada are considered. The UK government's provisions for the PPP and their implementation in the post‐PPP NATS are then outlined for these six categories. Finally, the 11 September 2001 terrorist attacks have had major impacts on air travel and their consequences for NATS in the six categories are highlighted. This paper concludes with some of the issues that need to be addressed to ensure the success of the PPP for NATS.     

The risk of walking

Analysis of National Travel Survey data on the amount of walking done by 17,000 individuals has shown that people spend about twenty minutes per day travelling by foot, on average. This implies a pedestrian accident rate of about 500 accidents per hundred million miles walked, a greater rate than for car drivers but less than for motor cyclists. This paper also relates accident risk to age and sex of pedestrian, time of day, day of week, and month of year. It is further shown that, for daylight hours, the average number of pedestrian accidents is approximately proportional to the product of vehicle and pedestrian flows.The authors would like to thank the Department of the Environment and the Transport and Road Research Laboratory for making available NTS and accident data respectively, and C. E. Mollart for his able assistance.     

Port privatization policy and practice

In recent years a significant number of countries have implemented policies aimed at reforming their port industry. In the belief that it will improve efficiency and reduce the heavy financial burden placed upon governments that attempt to support such a capital-intensive industry, privatization has often formed an important strand of such policies. A key claim in favour of privatization is that the transfer of ownership from public to private hands will ultimately lead to an improvement in economic efficiency and, hence, financial and operational performance. This paper investigates the theoretical underpinnings and practical validity of this claim and concludes that privatization is only a partial cure for what ails the world's ports and that, if implemented in isolation, it simply cannot deliver the much-needed panacea for the industry's woes.     

Public–private partnerships: a review of economic considerations with particular reference to transportation projects

The paper sets in context some of the more recent work that has been conducted on public–private partnerships (PPPs) in the provision and operation of infrastructure. PPPs essentially involve a government or its agent signing an agreement with a private company or consortium to supply it with services with the private sector actor involved in major elements of designing, building, temporarily ‘owning’, and running the physical assets; basically they are long-term development and service contracts between government and a private partner. The paper outlines the development of economic thinking regarding the rationale behind PPPs, the extent to which unbundling is optimal and the forms that it may take, the nature of the contracts that are enacted and their renegotiation, the awarding of contracts, and matters of possible corruption. By way of focus, it also provides some indication of what empirical studies in the transportation have thrown up regarding the outcomes of PPPs.     

Evaluation of public transport: Method for application in open planning

This paper discusses a method to evaluate scheduled, fixed-route public transport. One major evaluation criterion in the method is total travel time, subdivided into walking time, waiting time, time on vehicle, transfer time, and concealed waiting time. The other major criterion is costs incurred by a given supply of transport. In contrast with conventional methods, this method operates with real measures, i.e. real location (instead of traffic zones), real time (instead of average travel time), and real costs (instead of proxy-costs). The purpose is to produce relevant and easily understandable results suitable to open planning, for instance planning with citizen participation. Five examples of application of the method are given: (1) evaluation of changes in suburban bus services; (2) evaluation of geographical localities as regards public transport; (3) evaluation of circular bus routes; (4) evaluation of flexible work hours versus fixed work hours and, finally; (5) production of user information on transport service.The research on evaluation of public transport was carried out in collaboration between Aalborg Municipality and the University of Aalborg 1980–1981. It was funded by the Department of Education, the University of Aarhus, Aalborg Municipality, the University of Aalborg's Data Centre and the University of Aalborg. The translation of this summary paper from Danish into English was funded and carried out by the Transport and Road Research Laboratories, Crowthorne, England.The paper summarizes: Bent Flyvbjerg, Kjeld Kahr, Peter Bo Petersen and Johs. Vibe-Petersen (1981).Evaluation of Public Transport — Method for Application in Open Planning. Vol. I & II. Aalborg University Press, Aalborg, 402 pp. In Danish.     

Changing patterns of urban travel Part 2. public transport and future patterns of travel

This two‐part paper contains most of a report prepared by TRRL for the European Conference of Ministers of Transport, and presented by one of the authors to the Council of Ministers in November 1984. Part 1, which was published in the January‐March 1986 issue of Transport Reviews, looked at the way cities have been changing over the years and the influence of growing car ownership on trip patterns. This part examines the changes in public transport use in more detail, considers the interactions between the various underlying trends, speculates on future travel patterns by both public and private means and considers the likely impact of land use and transport policies.     

Optimal vehicle size for road‐based urban public transport in developing countries

Road‐based public transport in the cities of developing countries comes in a variety of physical and organizational forms. Many of these cities have a large component of unconventional or intermediate public transport (IPT). IPT often fills the gaps in service that cannot be provided by the operators of conventional public transport. The contrast in institutional framework between the operators of conventional vehicles and IPT is sharpened by the profitability of the two types; conventional buses, usually organized in large fleets and often run by the government, are seemingly difficult to maintain as a commercial enterprise whereas IPT which is usually privately owned in small fleets is profitable. A considerable debate has arisen over which type of public transport system (conventional or IPT) to encourage. The debate has often been confused because it involves two quite separate issues: whether the provision of public transport should be left entirely to private enterprise, and, the technical and economic benefits of different bus sizes. Size of vehicle is a particularly important issue in the developing world because vehicles of different size are in common use and are frequently in competition with one another. The purpose of this paper is to review and critically assess current research work on urban public transport with particular reference to vehicle size in the context of Third World conditions.     

Transport deregulation and cross‐border trucking in North America

Internationally, recent years have seen a spread of deregulatory policies with respect to transport. Equally, transport movements across national boundaries have expanded as trade has grown. Despite these two quite noticeable trends comparatively little has been written on the problems that are created for cross‐border traffic as the result of differential changes in national regulatory policies. This paper is concerned with looking specifically at what has happened in the context of road freight transport movements across the U.S.‐Canadian border and the wider (especially for the formulation of a Common Transport Policy for the EEC) lessons which can be learned from it.