Privatization

The Flexibility Industry Discovers the Virtues of Rigidity

An important belated update from the world of ridesharing – Uber is now testing a feature they are calling "Suggested Pickup Points", which directs customers to walk to nearby locations that are easier for their drivers to reach, saving time for both the driver and (in the case of UberPool) for other passengers on board.  Lyft takes this even further, offering discounted rides on its Lyft Line service for people who come to meet it.   

You may be familiar with an identical concept in the public transit industry, called a "stop" or "station" — a location near to destinations, but maybe not at their front door, that is cost-effective for a transit vehicle to reach.  This saves the driver the time it takes to drive to the precise preferred location of each passenger, which is especially crucial if there are other passengers on board whose travel time is also valuable.  (It also encourages a bit of walking where that's easy to do, which is good for you!)

This new feature illustrates how a demand-responsive service like UberPool can evolve to resemble the very fixed route bus that it often pretends to be supplanting, particularly when serving high-volume markets.   Discounts for walking to a pickup point make perfect sense, for the same reason that fixed route transit should be even cheaper; the customer is taking on inconvenience in return for a more efficient transit service.  

These moves show these companies recognizing the geometric logic of rigid, fixed transit: that when you connect places where many people want to go together, along a fast, direct path, the resulting service is both efficient to provide and useful to vast numbers of people.  

Flexible transit sounds like it's more responsive to our needs as customers, but if you want it to be affordable it has to be efficient.  The vehicle that comes to your door is intrinsically a low-efficiency concept when efficiency means "passengers/driver hour", as it will so long as the cost of service is mostly labor cost.  

That's why, for decades, transit agencies have  sometimes deployed flexible services in low-demand but growing markets but then replaced them with fixed routes as demand grew beyond what the low capacity of flexible services could handle.   Transit agencies also know about "fixed stop Dial-a-Ride", which is the specific phase of this inevitable evolution that Uber and Lyft are exploring now.  

The cool kids at Uber and Lyft are showing that for all their pretense of having invented something new, they live in the same geometric and economic space as their ancestors, and will evolve the same solutions that worked in the past.  Data is cool, and technology is cool, and enraptured high-paying customers are very cool, but none of that changes the facts of space, biology and economics, ever. 

Will driverless cars change all this?  Not if we also have driverless buses.  In that case, the math and geometry, and the nature of efficiency, will be largely the same.

 

No, Let’s Not “Uber” Our Bus System

Have you just read another article claiming that public transit would be better off if we unleashed private innovation?  Ask whether they're talking about privatized operations or privatized planning.  These are totally different things, but it's currently fashionable to confuse them.

Graduate student August Ruhnka, writing in the Denver Post, is the latest in a series.  After reviewing the real cost and quality control issues plaguing US bus systems, he goes on to propose a fatal confusion between privatization of operations and privatization of planning.

The remedy is simple. The city awards a route bus contract after a competitive bidding process, thus entering into a private/public partnership.

So far so good.  This is the standard model of privatized operation.  But then, OMG:

By privatizing our bus system's day-to-day operations while still providing public oversight, private operators will be able to change routes, schedules and fares as frequently as necessary without the need for lengthy public hearings and political approval.

"Change routes, schedules, and fares?"  This is the privatization of planning.  It features the abolition of "political approval," which is a polite term for the abolition of democratic controls over spending the public purse.   It's also produced some of the worst bus systems — in terms of both disutility and waste — that I've ever encountered in 23 years doing network planning.  Ruhnka goes on:

Today, successful privately operated transit projects like the Sydney Metropolitan Bus System, Hudson-Bergen Line in New Jersey and the JFK Air Train in New York are chugging away.

Only one of these examples is even a bus service, where route changes are an issue, and none of them are examples of the privatization of planning that Rohnka proposes.   They are all examples of privatized operations.  

The Sydney example is more apt than Rohnka knows.  Planning was controlled by private operating companies over much of Australia and New Zealand when I started working there in 2006.  Now, all over both countries, planning is being moved back into the public sector, while operations remain private. That's happening, in part, because transit planning by operating companies produced fantastically inefficient bus systems such as the one in Auckland, New Zealand, which I have been helping the new Auckland Transport to redesign.  

The problem was not just privatization but turf.  Private companies who control just certain bus routes may optimize their own bus routes, but that doesn't optimize the whole taxpayer funded network and can in fact make it worse.  (The same problem can afflict turf-bound governments, of course, but turning them over to the private sector does nothing to solve that problem, while it does remove our ability to hold elected officials accountable for it.)

In cities across the world, major bus corridors are becoming important redevelopment areas.  Bus service has a huge nexus with a range of important government activities, notably road design and land use planning.  To give up control over the design of bus services is to give up control that's needed to do those jobs well.

Public hearings are a drag, and the approval process for bus service changes in America is exhausting for both elected officials and the public.  Preparing for this process is central to every project I do.  My job is to help elected officials (or their appointees) make clear decisions about the real tradeoffs that transit planning requires.  These are hard choices that must reflect a city's ambitions and values, and that must be linked to a city's decisions about land use, urban form, and social policy.

All these thoughts are supposed to give way, of course, to the romantic idea that we could "Uber" our bus system.  

In light of our Uber-dominated downtown, it is time for us to make this switch. Private-route contracts establish a sustainable procedure to constantly test the market to achieve the lowest cost. Commuting in downtown Denver requires three things that currently RTD lacks: demand-response (paratransit) operation; experimental services; and remedying routes that have low ridership. All the above situations require a level of flexibility that the private sector can provide.

Uber is big and new and financed and sexy, so how could this not be better than our old bus services?   (A dismissive view of  "political approval," too, is part of the Uber mystique.)

Uber today is a taxi and (limited) shared ride service using small vehicles to carry small numbers of people at once.   Assuming you pay the driver decently (a big assumption in the private sector) the cost-effectiveness of transit is going to lie in passengers per driver, because pending driverless vehicles, the driver is most of the cost.  And the only way to get that number high is to run large vehicles in fixed-route services that are so well designed, and optimized over so many purposes, that lots of people ride them.   The Uber model does not scale to large-vehicle fixed-route transit, which is also known as cost-effective transit.  

Why, then, does downtown Denver require "demand-responsive operation"?  Downtowns are big, dense, and need to use street space efficiently, so large vehicles are the key.  Compared to big buses with decent ridership, demand-responsive service is a way of carrying very few people at a high cost.    There is no way that a demand-responsive solution, in a place where fixed routes could work just as well, makes any sense as a way to make transit affordable to low-income people, one of Ruhnka's alleged concerns.  Affordability is scalability.  If a solution doesn't scale efficiently — in terms of labor cost, energy, and urban space, it will naturally be expensive.  

So to the extent that some people think they need a demand-responsive service downtown (apart from paratransit for the disabled) by all means let Uber and Lyft do that.  Demand-responsive is such an intrinsically inefficient form of transit that deploying it downtown can only be for the purpose of serving relatively fortunate people at fares much higher than transit fares.  That's a great role for the private sector.  There is also a role for demand responsive service in suburban areas where development patterns preclude efficient transit, through contracts between demand responsive providers and transit agencies.  But not downtown.

Another way of describing all of the "demand responsive" or "Uberization" fantasies is that they are predicated on moving large amounts of steel and rubber per customer trip, compared to big-vehicle fixed-route transit.  Even without considering the economics of labor, this can only be less efficient, in terms of energy and urban space, then what crowded big-vehicle transit achieves.  (And yes, you've probably read that a lot of big buses run around empty, as though this means that buses are a poor tool.  The refutation of that argument is here, and here.)

Transit is full of opportunities for private sector involvement, including in operations, infrastructure, and my own job, professional advice.  The private sector is always welcome to innovate, and there are markets — generally for higher-end services and higher fares — that the private sector will probably take over.  There are also fascinating opportunities to use Uber/Lyft models to improve the efficiency of services to low-demand areas — that will require partnership with suburban communities or transit agencies.

But privatize planning?  Let private companies re-arrange transit services without regard to the impact on the city and its values?  That's the opposite of democracy.

Luca Guala: driverless buses will be more transformative than driverless taxis

34Part 2 of my letter from Luca Guala, of the Italian consulting firm Mobility Thinklab.  (Part 1, on personal rapid transit, is here.)

Last summer, we tested driverless minibuses along a route of 1.3 km on a pedestrianized boulevard in Oristano, a small town in Italy. The idea was to test driverless vehicles mixed with traffic.

Why minibuses and not taxis? Firstly, because it is much simpler to teach a robot to follow a fixed route, rather than teach it to go anywhere the passengers want to go. Such a system is already operational in Rotterdam (2getthere.eu/projects/rivium/) and it works well, but it has one drawback: the tracks are segregated and they represent an ugly severance in the urban tissue.

But if the vehicles are allowed to run with cars cyclists and pedestrians, a public transport route can be “adapted” with unobtrusive measures to accept driverless vehicles, and the people sharing the road will quickly learn to live with them. The main problem here was not technical, as legal.

Hence the idea of testing similar vehicles in an open field mixed with pedestrians. The first test we did had mixed results, the second test that will be done in La Rochelle, France this winter will take advantage of all that we learned in Oristano.

So what did I learn from all of this? That driverless cars very likely have a bright future, but cars they will always be. They may be able to go and park themselves out of harm’s way, they may be able to do more trips per day, but they will still need a 10 ft wide lane to move a flow of 3600 persons per hour. In fact, the advantage of robotic drivers in an extra-urban setting may be very interesting, but their advantages completely fade away in an urban street, where the frequent obstacles and interruptions will make robots provide a performance that will be equal, or worse than, that of a human driver, at least in terms of capacity and density.

True, they will be safer (especially because the liability for accidents will be borne upon the builder) and a robotic traffic will be less prone to congestion (I envision robotic cars marching orderly like robots, packed at 1.5 second intervals, while their occupants fume wishing they could take the wheel perfectly aware, but not at all convinced that their robocars are more efficient drivers than they are – or worse, they DO take the wheel overriding the … robots!), but I do not expect driverless cars to dramatically increase the capacity of a lane to transport persons. 

Driverless buses, on the other hand offer an interesting feature: the human driver is no longer needed, removing an important cost and several constraints.  This allows them to serve efficiently and economically low-demand routes and time bands, while allowing [agencies] to concentrate the number of manned buses on high demand routes at little added cost. 

I take all this automation talk with a grain of salt still, as I don't think we've begun to explore the human response to it.  But Luca is right about the key point:  driverless buses are a much easier problem than driverless cars, and their space-efficiency will continue to be crucial in busy corridors where even driverless cars will add up to gridlock.

Luca's last paragraph suggests that driverless buses will start with smaller vehicles in simpler situations, which is a possibility.  But of course, once the concept is proven, the economics of driverlessness will create pressure to bring the technology to big buses.  The same logic is also driving the movement to run fully-grade-separated without drivers, on the model of Vancouver, Dubai, and Paris.  The logic of driverless trains is easy: with automated train controls systems there is really not much for a driver to do in non-emergency situations, and these cities have found that those tasks are easily automated.  We are all used to small systems of this type, because we encounter them in large airports.  The driverless bus in traffic is a harder problem, but we will have solved all of those problems if we ever develop driverless cars.  In fact, the problem of the driverless bus, which never goes into alleys or minor streets, should be considerably easier, since navigation turns out to be one of the biggest challenges for the driverless car.  

Note also that the challenge of planning for driverless cars is not in envisioning a utopia where they have complete dominion over the street.  The future must be evolved, which means that we must plan for the interim state in which some cares are driverless and most aren't.  That is a situation where driverless buses could thrive, because they will be competing with something that — in terms of poor capacity utilization — resembles today's traffic on major streets, not a world optimized for the driverless car.

As Luca indicates, we know what the problem with driverless transit will be: long fights with labor unions who feel entitled to cradle-to-grave  security in a single job.  It will be one more kind of automation that requires people to retrain and to participate in a more complex and competitive economy.  In an ideal system, many drivers would be replaced by support jobs such as fare inspectors and roving problem-solvers; as on Vancouver's SkyTrain.  This seems to be what Luca is envisioning when he speaks of the continued need for "manned" services.  

But the real result of massively abundant transit — which is the real point of the large driverless bus  – will be massively more opportunity for all kinds of innovation and commerce to happen in a city,  unconstrained by the limits of car-based congestion.  That's a wrenching change, and I am as adamant as anyone about the need to protect workers from exploitation.  But in the long run, over a generation or two, the outcome will more interesting jobs for everyone.  Bus drivers shouldn't encourage their children to go into the same profession with the same expectations, but that's true of many jobs — perhaps even most jobs — in this rapidly changing world.

the evolution of logic in privately planned transit

Step out into most developing world cities, and you'll see something like this:

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 Lots of vans sitting around, or looking maybe like they're about to go somewhere useful.  Vague cardboard signs in the windows suggest they may or may not be public transit of some kind.

They're called mutatus in Nairobi, colectivos in Latin America.  Over much of the world these informal, private, for-profit vans, run at low cost for low fares in areas of high demand, forming the basic public transit for a city.  Generally they run along a particular route out of a hub like the one above, but sometimes it's possible to vary the route depending on what you can negotiate with the driver.  You can count on them to hit key locations but not necessarily the exact path they'll take.  You also can't be sure of when they'll go.  Sometimes they wait until they're full before leaving.  

Today in Atlantic Cities Emily Badger tells the story of the Digital Matatus project, an attempt to map and describe the spontaneously evolved patterns that these semi-fixed-route buses operate.  Although nobody planned this network, it's more orderly than you'd guess.  Download the sharp, complete map here.

Matatu map slice

What do I notice?  Practically everything goes downtown!

Matatus have organized themselves into routes because that's to their benefit; they train customers where to wait for them along reasonable paths so that they aren't driving around looking for customers individually.  The idea of the route — and of an efficient, non-duplicative spacing between routes — arises spontaneously from the economics of the product.

But they almost all converge on downtown, creating huge jams there.  Nairobi is clearly big enough to  have large flows of people crosstown to many non-downtown destinations, suggesting that a more efficient and liberating network would have more grid elements.  This is a common thing that goes wrong in privately evolved systems.  Every matatu wants to go downtown because it's the biggest market, and a mutatu driver doesn't have to be coordinated with anyone else to fill a bus going to and from there.  This  problem that bedevils privately routed and scheduled operations everywhere.  

Crosstown service, by contrast, requires frequency on a single path connecting several major dots, and it has to leave from organized non-downtown hubs where many other services connect to it.   That requires more organization, so it's less likely to arise spontaneously out of private operators optimizing for themselves. 

So you get a single market overserved and other markets underserved.  This is very much like the way a narrowly-focused transit agency will throw too much service at a single market rather than building a network useful for many markets.  It takes more planning and management to create a network, and this usually requires a government willing to impose order.  

This same problem was observable after the wholesale privatization of buses in Britain.  Suddenly there was lots of duplication of bus service into the biggest downtowns as everyone chased the easiest prize, but service disappeared from crosstown markets that could have done well, but that required a network of organized connections to succeed.  That network is what privately motivated transit has trouble delivering, because it usually requires cooperating with people who are perceived as competitors.

Now and then, these systems get reorganized by government into more logical routes that spread the network across the city for easier everywhere-everywhere travel, as happened in Santiago in 2007.   The transition is hell, but when you're finished, you have a network that's much easier to use to go all over the city, and a much smaller knot of buses downtown.

The moral?  Disorganized transit systems "planned" by the actions of many private actors do naturally evolve certain forms of efficiency, but they do not naturally evolve into the most efficient and productive network for the whole city.  That final push into coherence requires network design!

the silicon valley shuttles, revealed

Is this kind of network the future of transit?

 

San Francisco Silicon Valley Shuttles

This map by Stamen Design shows the paths of the various Silicon Valley bus services that flood San Francisco each morning and evening peak.  (Linewidth is proportional to frequency.)  All these lines running around San Francisco extend south off the map, duplicating each other for more than 30 miles until they diverge to serve different employers in Silicon Valley. The colors indicate which employer.  In general, these private buses are open only to the employees of the company in question.  

These buses carry some of world's smartest geeks between the manicured suburban headquarters of Google, Apple, Facebook, Yahoo, EBay and Electronic Arts and the diverse, interesting, crowded, messy city that these geeks insist on living in — a distance of 30-40 miles.

(Here is a great page showing the process Stamen went through to get to this map.  As you'd expect from a design firm, it's officially a work of art, called The City from the Valley.)

There is a public transit option in the same corridor, the Caltrain commuter rail line, but it can't begin to compete with these buses for speed, directness, and certainly the number of transfers required.  

How should we feel about these privately operated services, which are effectively employee benefits at these companies?

Here is Alexis Madrigal's response, in the Atlantic:

 My favorite data design firm, Stamen, released a map showing all the private buses that run from San Francisco to Silicon Valley, the elite's mass transit. Work in one of those places, and you have a wonderful travel experience. Everyone else gets the bus or an underfunded Caltrain. One way for our country's elites. The car and a crowded highway for everybody else.  

"The elite's mass transit" versus "underfunded Caltrain."  Is this really a class divide, with all the perils that class-based thinking implies?   These buses have to drive to San Francisco because the geeks on board aren't willing to buy a big house in the suburbs of Silicon Valley.  They want to live in a city, where they step over homeless people and deal with crowds but also have access to all that a city offers. So they're an unusual elite.  

If you love inner-city living so much that you're willing to commute almost two hours a day, then I expect you're someone who's happy with the basic proposition of city life.  That means that you're used to being in close proximity to strangers, so I'd guess you'd be a willing passenger on a public transit system if that transit system were useful.  

So the real story here is not the upscale demands of "elites" but the story of "underfunded Caltrain" and and more generally the way that infrequent, slow and poorly connected transit systems are forcing these big employers to run so much expensive service of their own.

The inadequacy of transit between San Francisco and Silicon Valley lies in several things.  First, neither the employers nor most San Francisco homes are anywhere near the Caltrain commuter rail line, so using that line requires multiple transfers — often two at the San Francisco end.  Second, the line is infrequent, designed for speed rather than frequency, which means that using shuttles between business parks and rail stations always involves the slight anxiety of the bus being late and missing the train.  

Politically, the problem with this commute is that it crosses two county lines, and in California, where almost all transport decision-making happens at county-level agencies, a multi-county transit problem is orders of magnitude harder to solve.  There is little doubt that if Caltrain were all in one County — maybe one the size of Los Angeles County — it would be a vastly better service by now: more frequent, probably electrified, probably extended to make better connections in San Francisco.   But split between three counties it has always seemed peripheral to many county-level decision makers, so when its needs have conflicted with another pet project, Caltrain has been consistently shoved aside.  

Most recently, Caltrain's future has been made dependent on the California High Speed Rail Project, which will help improve and extend Caltrain only in the context of needing to share its track.  It does appear that Caltrain will finally be extended to a downtown San Francisco terminal where most of the city will be one transfer away instead of two.  Caltrain may also become a little faster if, as contemplated, some minor stations are closed.  But Caltrain will probably never be frequent given the new constraints of track sharing.  

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But why should people have to commute such distances at all?  In this case, it happened because a whole mass of companies decided that they all had to have vast corporate campuses that are too big to be in walking distance to anything.  The critical mass of Silicon Valley congealed in the high-car age, as early icons like Hewlett and Packard outgrew their garage.  Stanford University has always sat in Silicon Valley's midst like a queen bee, happy to seem the indispensable center of the burbling mass of innovation.  Since then every new breakthrough firm, from Google to Facebook, has felt they had to be there.  

But now, that critical mass is in the wrong place for the needs of the next generation.  A few of the area's suburbs are trying to build downtowns that will give a bit of the urban vibe that younger geeks seem to value, but many of these suburbs are dominated by people who want nothing to change. So it comes down to how the next generation of internet employers choose  think about how to attract top employees.  Twitter made a courageous choice, moving its headquarters right into San Francisco, but Apple is digging itself deeper, building an even larger and more car-dependent fortress in its corner of the Valley.

Finally, this joke is on the lords of Silicon Valley itself.  The industry that liberated millions from the tyranny of distance remains mired in its own desperately car-dependent world of corporate campuses, where being too-far-to-walk from a Caltrain station — and from anything else of interest — is almost a point of pride.  But meanwhile, top employees are rejecting the lifestyle that that location implies.

Geeks whose brilliance lightens the weight of our lives have bodies that must be hauled 70 or more miles every day, at a colossal waste of energy and time.  Is this really the future?

dissent of the week: uk bus policy and “profitability”

In a recent guest post, Peter Brown praised the Tyne and Wear (greater Newcastle) region in the UK for seeking to regain government powers of integrated planning.  The new paradigm is what the Brits call a "contract scheme" in which the government controls planning and operators provide service under contract with government.  This is pretty much how privatized operations work in North America.  The rider's is a customer of the government agency, the government agency is the customer of the bus operating company.  Each link has accountability; operating companies are accountable to their government purchasers, while government is democratically accountable to voters.

UK reader John Smith responds:

Bus operators in North East England have formed the North East Bus Operators' Association to vigorously oppose the imposition of a contract scheme in Tyne and Wear. They are working together with Nexus on a Voluntary Partnership Agreement (VPA), which will provide much of the benefits of a contract scheme without the 'unintended consequence' of transferring the financial responsibility to the public sector, particularly at a time when local authority finances are under increasing pressure. You can read about it here.

Commeter Peter Laws also responded enthusiastically to the fact that 90% of bus miles outside of London run without subsidy.  

Not so fast.  While it's obviously desirable to reduce subsidy/bus, is the purpose of this savings to be able to afford more buses?  Or is it just to avoid spending money on bus service?

The problem with aiming zero-subsidy service is it usually implies zero public control.  Government is shrivelled to the role of a "regulator," with the implication that, as in safety regulation, government can enforce laws but not direct the provision of service to serve larger public ends.

Government, especially local government, has entirely valid interests that are served by operating public transit services.  These include not just social service needs, but also a desire to support its urban development intent, or, as in Oxford, a need to organize service so that it uses scarce street space more effectively.  The old privatization paradigm made it almost impossible to address these needs.  For example, Oxford's effort to get the two bus operators to co-operate on using street space more efficiently would have been impossible, because any such co-operation was considered collusion. (Legislation under the last Labour government finally made it possible.)

Co-ordination of land use and transit, too, was impossible under the old regime, except insofar as an operating company considered it to be in their financial interest.  There was no way for government to mandate such co-operation.

Or consider the great problem of frequency.  One way you minimize subsidy or maximize profit is to run as little service as possible to serve as many riders as possible, just as the US airlines are doing, for example.  Thus, a private operator tends to be happy with a much lower level of service than a public transport authority or local government or local population want, and would pay for.  

This is especially important when a Frequent Network is at stake.  There may be large network effects, with long term importance to city form and sustainability outcomes, that arise from running a service more frequently than its break-even point, but it is fiendishly hard to do this even by subsidizing the operator to do it, because you are then declaring certain trips of a line to be "profitable" and others "subsidized." In fact, because people respond so much to frequency and span, ridership among trips on a route is thoroughly interdependent, so you cannot declare ridership on a trip to be solely the result of that trip's existence.  As a result, any separation between "profitable" vs "subsidized" trips on a route becomes an unmeasurable fiction.

So it's hard.  I think the American privatization model (transit agency controls planning, hires operators just for operations and maintenance) enables much clearer democratic conversations about the nexus between public transport and public goods.  But I understand why bus operating companies in the UK-influenced world often don't like that outcome, and why people whose main goal is to not spend money on transit don't like it either.

guest post: peter brown on the decline of u.k. privatization of transit

Peter Brown is a lifelong UK transit enthusiast (and an HT reader from the earliest days).   He is a member of the Light Rail Transit Association (LRTA), and a former volunteer tram driver at Seaton Tramway, Devon, England.

Twenty six years after the Thatcher government deregulated local bus services in the UK (outside London and Northern Ireland), the calls for some form of re-regulation persist.  

The latest issue is the stated ambition of the Tyne and Wear Passenger Transport Executive (PTE), which today calls itself 'Nexus,' to restore government control of planning and management for the bus system in the Newcastle-upon-Tyne/Gateshead/Sunderland conurbation.  This is significant because for a few years in the 1980s this authority operated the UK's only example of an integrated transport system on a par with European best practise — a system that was destroyed by the Thatcher government.

Img_10384In the early 1980s, the Tyne and Wear PTE directly operated a large bus system which was formed by the takeover of the former municipal fleets of Newcastle, Gateshead, and Sunderland, and also built and operated the LRT system (The Metro).  During the short life of this integrated system it was possible to travel between any two points on a single ticket by bus, local train, Metro, and ferry services. The bus system was redesigned to feed into the metro at purpose built interchanges for journeys into central Newcastle, thus reducing bus movements across the heavily congested Tyne bridges.  
 
Unfortunately the Thatcher Government deregulation of bus services destroyed this integrated network.  Deregulation swept away a regulated system that had existed in the UK since the 1930s. It meant that bus companies (referred to as ‘Operators’ in the UK) had to self financing through the fare box. Blanket subsidies and any form of network co-ordination (or what Americans would call "integrated network planning") were terminated.  In short, it became illegal to think of transit as a public resource, integrated with the city, and managed for greatest possible efficiency and usefulness.

Instead, the ideal became competition.  Bus operators could operate "commercial" (non-subsidised) networks anywhere, and the role of local government became to purchase subsidized services wherever more service was desired.  Integrated transit features that many cities take for granted — including citywide fare systems, lines that aim to connect with one another, and rational management of limited resources, became effectively impossible.  
 
Yet if the goal was competition, the system failed.  As in most of the UK today, there is very little direct on-the-road competition between the three bus companies in Tyne and Wear.  Instead, each company has settled into a "territory" in which the lack of competition is the key to profitability.  Passenger journeys starting in one operator's territory that finish in another's require the passenger to change buses and pay twice. Nexus is no longer happy about this and wants to take over the commercial networks and purchase operations from the bus companies – this is known as a 'Quality Contract' and there is new (as yet unused) legislation to do this. 

In short a Quality Contract would involve the suspension of deregulation within a specified area and the imposition of a tendered system whereby the transport authority would specify the network, fares, frequencies etc. As urban bus operation outside London is a profitable activity (nationally approximately 90% of bus mileage requires no direct revenue support) the proponents of Quality Contracts believe that massive subsidies would not be required.  
 
In order to bring about a Quality Contract several conditions must be satisfied, with an independent board to adjudicate. The promoters would have to prove that the new system would:

  • have a positive impact on the use of bus services
  • will be of benefit to users of bus services by improving quality
  • will contribute to the implementation of the local transport policies
  • achieve all the above in an economic, efficient and effective manner.

 All the above leave lots of room for argument against them, and since the commercial operators would in effect have their businesses sequestrated without compensation it is likely they will use the legal process in full, including the European Court of Human Rights.
 
The alternative approach for a local transport authority to increase its influence in the provision of bus services is the 'Statutory Quality Partnership' as demonstrated in Oxford last year using powers from the 2008 Transport Act. 
 
The 2008 Act expands the terms of the previous voluntary Quality Partnership model to allow a LTA [Local Transport Authority — the tier of local government responsible for transport] to specify requirements as to frequencies, timings or maximum fares as part of the standard of service to be provided under a scheme, in addition to quality standards. But it also provides important safeguards to ensure that unrealistic conditions are not imposed on operators, and that their legitimate right to a fair commercial rate of return on their investment is not undermined. The process by which an operator can object to particular standards included in a scheme relating to frequencies, timings or maximum fares, is an important feature of this. But at the same time it places a responsibility on them to justify the grounds for their objection, thus minimising the scope for vexatious or frivolous objections.

In the context of Oxford, where such a scheme was implemented last year, there is no history of municipal bus operation. This could account for the partnership approach being more acceptable to that LTA.

Photo: Simon Billis 

On Privatization Nostalgia

Christopher Leinberger in the Atlantic is wondering if we can go back to the early 20th century practice of letting developers build rail transit lines, and reap the resulting increase in property values. This idea is likely to have a lot of superficial appeal, because it combines two pervasive attitudes in New World countries: (a) nostalgia for a supposedly simpler past and (b) a suspicion, especially common in the US, that government is always intrinsically less competent than the private sector.

But as someone who’s been around a lot of privately-funded transit projects (usually called public-private partnerships or PPPs) I think it’s important to pour some cool if not frigid water on the idea: Continue Reading →

Privatized Transit and (or vs.) The Public Good

Tony Judt has a fascinating piece at New York Review of Books on the ideal of social democracy manifested by most European governments: a democratic state with relatively high levels of taxes and government services.  Writing from a leftist perspective, he worries about the recent rise of economic analysis as a primary basis for government decisions. This trend, which he traces to Margaret Thatcher, has shaped the thinking of a generation of bureaucrats, not just in Britain but throughout the Commonwealth and also in parts of Continental Europe.  It’s almost universal in the British-derived cultures of Australia and New Zealand, where I work now.  Here, it often seems an idea about transit counts for nothing if it can’t be expressed in terms of “Cost Benefit Evaluation” (CBE) and “Key Performance Indicators” (KPI).   Continue Reading →