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What a great opportunity for public transport

This will be a nice case study for future students of business administration. Consider a company that holds a near monopoly in a segment of a market that has been growing by 7.7% per year for a decade. What does such a company need to do to turn a loss?

Bus Eireann and Dublin Bus managed this feat (after subsidies). I will not speculate how and why. But with respect for the workers that are being laid off, I think this situation provides a great opportunity for public transport in Ireland.

Bus Eireann and Dublin Bus need to cut costs. They want to do this by reducing the number of busses on the road and the number of drivers on the payroll. That is their choice. The plan is to trim the schedule. That is wrong. Instead of reducing frequency at selected routes, they should give up some routes altogether. The regulator should then sell the concession on these routes to the highest bidder. (This would not save public finance.) Service levels would be maintained where commercially viable. Competition would lead to lower transport costs. (This would not restore competiveness.) Unemployment would fall (but the incoming operators may prefer to hire other drivers than the ones just let go).

Overall demand for transport is down in any recession, but the share of cheap (i.e., bus) transport is up, so I think there is a business case for bus routes in Dublin.

Over time, the state-owned, subsidised incumbents may get their act together, or they may be replaced by commercial operators altogether.

This post was written in Switzerland, where there is a train waiting at the airport to take you to the university’s doorstep. I landed at 2:30 pm in Zurich and was well in time for my 4 pm lecture in Bern. Zurich and Bern are as far apart as Dublin and Athlone.

15 replies on “What a great opportunity for public transport”

Well Richard it seems that you have answered your own question (thus shutting off all of those potential dissertations?)

So if I understand your view it is the servicing of lightly traveled routes that does the financial damage to CIE. Presumably this is in part a consequence of the sprawling low density suburbs that the planning and political process has allowed/encouraged.

Are you sure that cutting unprofitable services to these suburbs will not cause social deterioration in some deprived suburbs, thereby proving more costly in terms of remedial public services in future?

I do not know enough about the two public-owned bus companies to say what went wrong — service obligations are not high on my list of suspected causes, though.

I’d be happy to pay much more than the standard Dublin bus fare if only the bus would take me where I want to go (say, from home to work) and I could rely on the bus to show up. Market shares have been dropping, so I am not the only one unhappy with the product provided.

A levy on standard routes would finance the provision of public transport in deprived areas.

Note that Bus Eireann and Dublin Bus propose to cut service levels, while I propose to let them do that but give someone else the opportunity to fill the gap.

Massey’s article for the ESRI journal (http://www.esri.ie/UserFiles/publications/20070328122524/QEC2007Spr_SA_Massey.pdf) gives a pretty clear idea of what the problem (at least the immediate cost and cash-shortage problem) is at Dublin Bus.

Our company has proposed to take over routes in the Swords area, reorganize them, upgrade services and cut costs. It is not sufficient to ‘sell off’ routes. It is necessary to reorganize the system. Public subsidies are going to be needed to develop new routes. There is no good reason why routes through deprived areas would be less profitable than routes through wealthy areas. It is also important to integrate the whole thing into a coherent network.

The recent DTA Act gives the authority to perform this reorganization.

It is a scandal that Dublin Bus have been allowed to (a) increase fares, (b) get an increased subsidy and at the same time (c) cut the level of services all at the same time.

Sadly, this is not just a public transport issue. Dublin Bus is responding to the need for cost-cutting in the manner of all our public service providers thus far in the new era of fiscal stringency.

Plan A for the public service provider is to cut the services that the organisation never wanted in the first place (Exhibit A: “gold” medical cards to over-70s) or wants to abandon (Equality Authority, assorted culture groups who lost their patron).

Once that vein is exhausted, the next target are the very services that the public value most i.e. a public backlash is the best guarantee of further funding (Exhibit A: withdrawal of substitution cover in primary schools would have landed parents with their offspring in the middle of the working week).

Ultimately, budget cuts will tend to be translated pro rata into service cuts. Where else can the cuts fall – on those who are charged with finding the savings?

Ray McSharry’s technique was “Dr. No”. He gave no-one any money if he could avoid it. He obsessed about seemingly trivial sums in Departmental estimates. Once he had convinced everyone of his absolute determination to restore fiscal balance, it seemed to have a magical effect on business confidence and revenue started to flow. He should have been put on An Bord Snip to make sure it doesn’t follow the pattern of An Bord Snip II (which Charlie McCreevy established) whose work was quickly undone.

Thanks for that Antoin.

You forget: (d) and lose money all the same.

They quote rising fuel costs as one of the reasons for their problems. Rising fuel costs hit private transport harder than public transport, so rising fuel costs should work to the advantage of Dublin Bus.

Now would seem to be a good time to introduce congestion charges, in Dublin at least. These would bring in some tax revenues and raise the demand for shared/public transport. Joined-up thinking would see the introduction of competition as part of an integrated plan.

interesting report on bus drivers in Chile.

http://www.nber.org/papers/w11744

I would imagine that we could learn more from logistic companies specialising on the likes of just in time delivery and inter-nodal transport.

take a simple example, a dart runs to malahide and also to sutton, they break away at howth junction, anybody who rides trains knows that it is the howth jnct to town bit that has the most passengers, the train arrives to howth jnct packed because the people from malahide have irregular service and they all pile in for the times the trains run, this hurts passengers further down the line who can’t get on (eg: fairview c. 8.15am any day) .

why not have a train that goes from malahide to howth jnct back and forth again and again, bringing people on a regular basis, the same with sutton, they end at the node of howth junction which becomes the outbound limit of the main darts from the city, then you get more regular service on the high density areas without sacrificing the outer areas who are regularly brought to a place where they can catch the next train into town. when you split the line fully a dart to sutton sacrifices a trip to malahide and vice versa.

transfers are a part of life in every functional rail system in the world (chicago L, NY subway, London Underground, Paris’s Metro etc. etc.) – except for ours of course.

Frank: All for congestion charges, but it would take a few years to build the required hardware and software (if we’d learn from other cities; more than a few years if build from scratch — cf Karl’s comments)

Dublin Bus has a specific issue in regard to duty on fuel. This is an issue that we also face. Previously, all public transport operators received a refund of duty paid. There is a long story, but basically, this was stopped. This did result in an extra cost for Dublin Bus, a couple of percent. DB got a corresponding increase in their subsidy, and also got an increase in fares, whch covers this by a wide margin. On the other hand, the price of diesel has fallen considerably over the last year. High fuel prices, as you say, should drive consumer demand.

Also, Dublin Bus does not make particularly efficient use of fuel. Heavier tri-axle buses are rolled out for daytime, late evenings and weekends, when their extra capacity is not needed, for instance. Also, there is a lot of driving on Dublin Bus that is not particularly efficient – heavy acceleration and breaking. It sounds ridiculous, but this really does make a difference to fuel efficiency.

You could build a congestion charge infrastructure similar to London quite easily. It’s quite a simple system technically – registration, and then enforcement using video cameras. If you decided to roll it out today, I’d say you could tender it in April and have it in operation by this time next year. There are issues with the system for sure, but it could be done.

The problem is really the bus/public transport system. You have to have an excellent bus system for a congestion charge to work well. The theory is that the congestion charge would free up capacity on the buses and make them cheaper, better and faster, but you have to build the capacity to give people (especially ratepayers in the city) confidence.

Antoin.

Thanks Antoin

Realistically, congestion charging will not be in place before 2011.

It will work fine for raising revenue. For changing behaviour, we’d need to have proper public transport and a ring of park & rides around the city. That’ll take longer.

If you really want to do it, it doesn’t take that long. The buses are sitting there in a yard. There are 5-year leases on roadside property going-a-begging. Hiring a builder does not take a long time. The technology can be done quick enough.

very good article. thanks for sharing. Just added you to my feed reader. Was searching for “trains” when I found “What a great opportunity for public transport”. Thanks for the good times reading your blog.

Hi,

Many years ago I worked with a few people in St Stephen’s Green who told me that when they got married in the mid 1950s they did not have a car. However they were able to get a bus at 1 o clock from the Green to Goatstown for a quick lunch and be back in their office at 2.15.

Unfortunately the industrial relation virus seems to have continued into all the CIE related companies from that time and militates against what would otherwise be a no brainer.

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