Transport services face gridlock if Bill passes

 

OPINION:The Department of Transport’s plans seek to be both competitive and protectionist – but fail to consider how to provide an integrated, high-quality network

THE FANTASY world of the “self-regulating market” appears to be alive and well. Do we never learn anything? Seán Barrett’s article on the Public Transport Regulation Bill (Opinion and Analysis, October 29th) repeats the myth that if we just open up markets to competition, this will automatically lead to the best outcome.

For a Bill called the Public Transport Regulation Bill, it makes scant reference to the regulation of private operators. Who checks if operators are complying with their licences? How do they do this – and who pays for it?

The Department of Transport says that “the cost will not be significant as the number of new service providers is expected to be limited and the industry itself reports on breaches of the legislation”. This could have been lifted straight from our notorious former Financial Regulator.

There are three main bus markets in Ireland – urban services, rural services and inter-urban services. Three procurement models are being considered with this Bill and the DTA Act 2008: direct award to Dublin Bus and Bus Éireann; licensing of applications by private operators to compete in the market (on-road competition); and tendering for private operators to compete for a contract to run services (off-road competition).

The department’s analysis suggests that the Bill will “adapt its licensing policies to market conditions, eg allowing [an] open approach to licensing on certain dense trunk routes where there is strong demand while recognising the characteristics of public service obligation services in certain urban and rural areas”.

This sounds sensible, but is not reflected in the text of the Bill, which is a classic Irish muddle – it both protects Dublin Bus and Bus Éireann’s existing networks and opens up everything else to a free-for-all. The last thing to be considered is what might provide a high-quality, integrated public transport network.

Rural services would need a separate article and won’t be discussed here. Regarding intercity services, Barrett’s analogy with Ryanair holds to an extent.

Intercity services are typically point-to-point services where on-road competition can work quite well.

However, the department is planning directly to award Bus Éireann a contract to run its existing inter-urban network, implying that licences for private operators would then be rejected if they are in competition with the State-owned services.

If the wish is for the State (through Bus Éireann) to earn money on profitable routes to subsidise unprofitable rural routes, then it follows that private operators should be excluded from the market. If not, then why not make Bus Éireann apply for licences in the same way as private operators?

Urban bus services are quite different. The key is not to provide point-to-point services but an integrated network of high-frequency services with easy interchange. Passengers can then go from A to B using whatever combination of services is best – by bus, train, tram or bicycle. This has been promised since the early 1990s and yet again we are failing to deliver it.

Here, however, the Ryanair analogy falls out of bed with a thud, as anyone who tries to make transfers between low-fare airlines to cross Europe will know. There is a trade-off between competition and integration. You cannot maximise both.

Barrett proposes complete deregulation as the solution. But his example of Aircoach is of limited use. The fact that a private operator can run a high-quality service between the airport, city centre and middle-class neighbourhoods in south Dublin does not automatically imply that deregulation will give the city an integrated transport network.

The British experiment is much more telling. In 1986, the bus service was completely deregulated overnight in regional cities, but not in London.

Research at the University of Westminster shows that initially the frequency went up, but bus use went down due to unreliability, fragmentation, poor integration and poor information. This led to a vicious circle of a reduction in frequencies, followed by further falls in passenger numbers, and so on.

A 2009 report by Britain’s Office of Fair Trading identified “structural issues” with deregulated on-road competition for urban bus services. People don’t shop around. They get on the first bus that arrives. In general, the market tends towards monopoly or becomes dominated by a small number of colluding operators. In most areas, this has raised fares and the costs of providing subsidised public service obligation contracts.

In London, where the services were not deregulated, there are still private operators and competition. Transport for London collects the fares through its Oyster Card system. It designs the network and tenders for private operators to run services to its specification. They get paid per bus kilometre run, with some incentives for performance.

Bus use grew dramatically in a virtuous circle. Frequencies at peak and off-peak hours were improved. There were also improvements in bus priority, information, integration, integrated ticketing and vehicle design.

So what’s to be done in urban areas here? If we follow the stated Government policy of actively procuring new urban services through competitive tendering, there will be a role for private operators, but it will be to submit tenders for services designed by the transport authority, not to skim off the cream by applying for licences.

However, as drafted, the Bill would allow the cherry-picking of profitable routes by private operators over time, with the loss of any hope of providing an integrated network. In practical terms, it will affect the profitability of Dublin Bus; it provides the unprofitable public service obligation services, which will be slowly run down. This is happening already, with the removal of 100 buses in 2009 because of a funding crisis, with the cuts concentrated on PSO services.

A report by Deloitte earlier this year found that the cost base of Dublin Bus is efficient. Work practices need some improvement, but the major failings are network design, information and customer focus. These functions are due to be taken away from Dublin Bus and moved into the DTA, which will commission new services from private operators and can benchmark Dublin Bus against them.

In the new programme for government, there is a commitment to further revise this Bill. The Minister needs to reform it to recognise that there are trade-offs between integration and competition.

He needs to set out what the different categories of service will be and which model will apply to each one.

The period of transition needs to be managed so that the new network can replace the current mix of private and Dublin Bus services and so that private operators are ready to tender for the new services that the DTA will procure.

This will be the first test of whether the Green Party is going to realise the minor concessions it recently negotiated. If not, the programme for government and the department’s Smarter Traveldocument are just greenwash.


James Nix is the transport and planning co-ordinator for the Irish Environmental Network, which seeks to represent the views of several environmental organisations and lobby government (www.ien.ie)

James Leahy is a chartered civil engineer and represents the environmental pillar on the Dublin City Council Transportation and Traffic Strategic Policy Committee and the Public Transport Forum of the social partnership