Transit service contracting for laymen (Part 1): The existing system

Our discussion in the previous topic of government subsidies for public transportation will easily segue into the concept of service contracting schemes for transit, since this would be the easiest way for subsidies to be infused. The traditional regulations for our public transportation denominations of buses and jeepneys and their derivatives makes it difficult to implement subsidies, whether these are given to the passengers, to the drivers, or in terms of fuel. Service contracting may address this issue.

There are, however, considerable issues and challenges which will make service contracting difficult, to say the least.  When implemented improperly, this may even become a venue for inefficiency, disruptions, high costs, and corruption.  That’s why there are considerable objections to this, too, at the national level.  It would be beneficial to know the rudiments of service contracting for us to understand what these entails, and its pros and cons.

We need to start with the existing traditional transaction first.  This is simple:  the government enacts policies and laws as to how private individuals or companies provide transit services, in the form of franchises and operational regulations.  The private sector thence provides the vehicles and their operations to ferry passengers according to the daily demand.  The government set the fares, the passengers pay the operators and drivers – well they pay the driver who in turn pays the operator on a “sharing” or “boundary” basis.  Usually the former.

The fact that operators and drivers continue to ferry passengers on the set rates attest to the fact that the arrangement is profitable and acceptable to both, but we won’t know how lucrative.  If it’s too lucrative, many new players will enter the business, until it evens out.  Efficiencies differ, too, so you have operations with good services and bad ones.  The way it has been all these years, transport services are definitely on the substandard side if we compare them to those in other countries, even with those of our neighbors.  In short, it’s an antiquated system, from the last century which should have been improved already.

Passenger demand is time-dependent with very high peaks in the morning (people going to work) and in the evening (people going home).  If sufficient capacity is provided, buses and jeepneys will be half empty during non-peak periods, and operators/drivers wouldn’t want that so there is always a shortage during peaks.  This results in passengers scrambling for rides in the morning, jostling with one another, to the detriment of women, children, old people and those with disabilities.  Add to that is the uncertainty of the time of the rides since these services are almost always unscheduled with no fixed frequency.  That is the sad state of our existing public transport system.  Drivers fight for passengers, passengers fight for their rides, and operators won’t invest in more capacity, even if needed, because this is not profitable.  And the government just watches over the entire drama and couldn’t do anything because that’s how the system has been designed, decades ago.  With this pandemic, it’s really time for a change. (To be continued)