The public transport dilemma

It hasn’t been discussed publicly yet, mainly because of people’s dislike of talking about subsidies, but this needs to be properly addressed and faced head-on sooner or later.  We’re always talking about what we call “the New Normal” and slowly, the world’s population has started to realize this is not something we hope will not come, this is imminent, it will happen, and we have to be ready for it.  Especially in public transportation.

We have discussed this many times, but let’s outline it once more – social distancing means less passengers on the same public vehicle and the capacities of the later will be drastically reduced per trip.  That’s about 50% for jeepneys and buses, though much lesser for the latter if originally standing passengers are allowed.   Rail transit capacity goes down to 15-25% of the original.  Since their operating costs would remain the same, their ability to gain a profit is terribly reduced as to make them not viable to operate anymore.

Even assuming they remain viable, we would need more vehicles on the fleet in order to cater to the existing demand – more trips per day, but definitely needing an expansion of the fleet.  With a dwindling profit margin, it would be difficult to invite new players on the market or ask existing ones to expand.  One way to have this is to increase fare rates.  This is politically and socially difficult but actually needs to be done because our existing tariff are very low, as compared to similar economies like that of our Southeast Asian neighbors.  This is a product of too much political consideration – leaders don’t want to alienate voters.  Which leads to a lot of undue pressure on the system.

Increasing rates to fair and reasonable levels is ideal but even this will only amount to so much because you have to consider the poorest of the poor who will be disenfranchised when fares are rationalized.  Adding P2-4 may be achievable but will not solve the deficit resulting from social distancing.  That vacuum has to be addressed by the government and the only way to do that is to subsidize that portion of the fare!  Now there are many ways this can be done – channel the subsidy to the passengers through subsidized fare, give a fixed or variable subsidy to the drivers, provide a fuel subsidy, or go on a separate service-contracting based on an availability payment scheme, similar to that in advanced jurisdictions.  This last option is actually the better one but which our government may not be ready to handle.

Whatever it will be, transport subsidies will surely be necessary in the new normal.  It’s not as if this is new – all our train systems in Manila are highly subsidized, too heavily if you ask me.  Especially MRT-3, with which until now, we’re bleeding billions of pesos.  And the buses and jeepneys which carry the bulk of the daily trips, the government just left alone, leading to their decrepit state.  It’s about time we make them competitive and world-class by providing the rightfully needed subsidies, as these generate huge economic benefits.