[sustran] Re: How much money should we spend on nicer buses?

[bruun at seas.upenn.edu]

Todd and Brendan:

You are both right. So it would make sense for the richer countries to  
give financial add
in the form of modern buses. Better that they export subsidized buses  
than subsidized
weapons, SUVs, etc.

Eric Bruun


Quoting Brendan Finn <etts at indigo.ie>:

> Dear Todd,
>
> I think we are facing one of the big differences between bus  
> operations in the Western economies and in so-called 'Global South',  
> which is the area primarily under discussion in the Sustran forum.
>
> In both cases the bus industry is labour-intensive - even more so in  
> 'Global South' - but labour rates in Western economies are many  
> multiples of their counterparts in other parts of the world. In many  
> countries labour and fuel do indeed account for almost 100% of the  
> costs. However, this is often because the companies are operating  
> fully depreciated vehicles - which would be considered life-expired  
> elsewhere - and the operators are avoiding proper maintenance costs.
>
> In my experience (and I very much welcome other views) four issues  
> are faced in Global South that are not so important in the  
> developed/high-wage economies:
>
> 1) The cost of new and higher quality vehicles, along with more  
> expensive maintenance requirements and spare parts, represents a  
> much higher proportion of the total costs. From the payback  
> viewpoint, a single fare might cost $1.00 in USA and $0.10 or less  
> in Africa or parts of Asia. It takes the revenue of 10 passengers in  
> many African/Asian cities to match the revenue from 1 North American  
> or European passenger, but the bus and the spare parts cost the same  
> amount in both countries.
>
> 2) Capital for investment is usually not available under the same  
> payment terms. In 'Global South', bus operators are often required  
> to make the repayments over a short period (e.g. 3-5 years) at  
> higher interest rates, with a significant deposit, and sometimes  
> with unreasonable collateral requirements. This means that a lot  
> more of the daily earnings go to bus repayment in the early years,  
> even if you do fully own the bus after 5 years. However, you might  
> have gone bankrupt in the meantime.
>
> 3) Availability of finance is tougher, and quite often it is not  
> possible to raise enough finance to meet what you would like to do.  
> This forces many cities/operators to choose between (a) a smaller  
> number of high-quality buses insufficient to meet the need - leading  
> to unmet demand or keeping the bad-quality vehicles in circulation  
> for a few more years; or (b) going for a higher number of lower-cost  
> buses that meets the need and brings in more revenue immediately.
>
> 4) There is less security of tenure, of necessary tariff increases,  
> of subsidies, of reimbursement for free/reduced rate passengers, of  
> protection from encroachment and illegal operation. In some cases  
> there may be disruption of social order and stability. The more you  
> spend and the longer your payback period, the more vulnerable you  
> become.
>
> The above are, of course, generalisations. Data on any of these  
> aspects from our Sustran colleagues would be most welcome. This  
> would be a good opportunity for some of our 'silent' members to  
> share their knowledge with us.
>
> With best wishes,
>
>
> Brendan.
> _______________________________________________________________________________________________________________
> Brendan Finn          e-mail : etts at indigo.ie          tel : +353.87.2530286
>   ----- Original Message -----
>   From: Todd Alexander Litman
>   To: Dr Adhiraj Joglekar ; sustran-discuss at list.jca.apc.org
>   Sent: Friday, June 19, 2009 7:46 PM
>   Subject: [sustran] Re: How much money should we spend on nicer buses?
>
>
>
>   I think it is very important to start improving public transit  
> service quality, including nicer buses, reduced crowding, faster and  
> more reliable service, nicer waiting areas, and amenities such as  
> on-board wireless services. Unfortunately, many transit service  
> performance indicators (such as cost per vehicle-kilometer or  
> passenger-trip) encourage cost minimization rather than service  
> maximization. If we fail to improve service quality we are  
> encouraging economically successful travelers to purchase a car and  
> abandon public transit because the system is only intended to serve  
> the lower end of the market.
>
>   The largest costs of public transit service are labor and fuel.  
> Vehicle capital costs represent 5-10% of total service costs. If  
> spending a little more on the vehicle improves service reliability  
> or attracts more riders (particularly discretionary travelers who  
> would otherwise drive) it is a worthwhile investment.
>
>
>   Best wishes,
>   -Todd Litman
>
>
>   At 08:01 AM 19/06/2009, Brendan Finn wrote:
>
>     Good points raised by Adhiraj. What it comes down to is which  
> value-set drives the decision-taking process. Do we spend a lot of  
> money needlessly for the brand name and the fancy stuff? Or do we  
> spend money wisely where we balance quality and long-life against  
> the possibility to buy and deploy a larger number of less-expensive  
> models?
>
>     Before comparing the merits, I think we have to acknowledge that  
> the expectations of users has risen a lot compared to when we were  
> growing up. People do want air-con in hot climates and they want  
> buses that don't break down. Cities demand buses with clean(er)  
> engines and fuels, although often the pressure for this comes from  
> donors. Even at the lower end, buses and engines have become more  
> sophisticated, and all the extra bits make them more expensive. That  
> said, there has been a huge advance over the past decade in the  
> quality of the buses coming from China and India, so you really do  
> have high-cost and low-cost options for most situations.
>
>     In my opinion, there are three main factors to consider:
>
>     1) What do the people want? What do they demand as a minimum  
> acceptable standard, what are their aspirations, and is there such a  
> big gap in price to go from acceptable minimum to something that  
> makes them feel good? There is only one way to find out and that is  
> to consult with the current and target future users. It sounds so  
> obvious, but how many city authorities and bus operators actually  
> consult their customers? How many truly try to understand what  
> features they like and hate about the buses they have today, what  
> would they like to keep, what are they crying out to change? Where  
> do we waste money on features that do not interest the customer and  
> where do we waste good opportunities that make people happy and cost  
> little?
>
>     2) What is the life-time cost of the vehicle, including  
> maintenance, spare parts, fuel consumption, offset by its  
> residual/resale value after 10-12 years? How important and what is  
> the economic value of reliability in the later years of the vehicle  
> life, so that a vehicle gives the same performance in its 10th year  
> as in its first? Traditionally, this is where Volvo, MAN, Mercedes  
> and some other makes gave an overall lifetime benefit. How much  
> ground have the Chinese, India, Korean and other brands caught up in  
> the cost-quality curve?
>
>     3) What can we afford compared to the urgency of the task to be  
> undertaken? If a city desperately needs 1,000 buses  
> additional/replacement buses, is it better to solve the supply-side  
> issue now with low-cost/lower-performance vehicles, in full  
> knowledge that many of these vehicles may only have a 5-7 year  
> economic life and have to be replaced relatively soon? But we can  
> offset the shorter life by the opportunity to develop the business  
> and revenue streams now that will provide the affordability of  
> better quality buses later.
>
>     I don't think there is a universal right answer for this,  
> despite the many inflexible "orthodoxies" we hear. As always, each  
> city needs to assess its own situation. In some cases the more  
> expensive bus might turn out to be the best solution, in others we  
> might find we can do a lot more with scarce investment money.
>
>     For me, this discussion highlights the importance of following  
> up on previous bus investment projects. We need to evaluate the  
> actual outcomes compared to the original objectives and  
> justifications. We need to learn where they vary from our original  
> expectations (for good or bad), and share that knowledge among  
> practitioners and decision-takers.
>
>     With best wishes,
>
>
>     Brendan.
>      
> _______________________________________________________________________________________________________________
>     Brendan Finn          e-mail : etts at indigo.ie           tel :  
> +353.87.2530286
>
>     ----- Original Message -----
>     From: "Dr Adhiraj Joglekar" < adhiraj.joglekar at googlemail.com>
>     To: < sustran-discuss at list.jca.apc.org>
>     Sent: Monday, June 15, 2009 1:12 PM
>     Subject: [sustran] Re: Beijing to build "public transport city"
>
>     >I find the comments from Carlos very interesting. Yes, more  
> investment needs to happen in public transport but sometimes one has  
> to wonder if the monies are being put in the right place. For  
> example, the general push in India is to invest in better buses -  
> but how does one define a 'decent bus'? I grew up using buses in  
> Mumbai, these cost a fifth or so of Volvo buses that seem to be the  
> craze for now. I never felt the buses in Mumbai were any inferior in  
> cleanliness or the comfort - they used to sport cushioned seats with  
> green leather like upholstery. Having travelled on London buses for  
> past 8 years and being a medic I
>     > can say the Mumbai buses had seats that did more justice to  
> one's spine than the reclined back rests that are increasingly common.
>     >
>     > Coming to the point - the whole idea of spending on a Volvo is  
> justified by authorities on the basis of a policy called  
> differential pricing - i.e. posh buses will pull posh people out of  
> their cars and
>     > that they will be happy to spend more on the tickets.
>     >
>     > On paper, this may seem logical, but I have yet to see  
> evidence of people leaving their cars simply because the bus is a  
> Volvo and now has an aircon in it. If anything the regular loyal bus  
> user shifts to
>     > these buses and pays more or indeed the train users in Mumbai  
> who are fed of super-ultra-crush loads switch to buses.
>     >
>     > I find public transport a great equaliser of sorts, its great  
> to see someone in a decent suit sitting next to someone who may be  
> struggling to get food to the table each day. But ethical and moral  
> reasons
>     > apart, one needs to know for sure if people switch to PT only  
> because it got 'nicer'.
>     >
>     > I would be interested in knowing if there is research in this  
> regard elsewhere which rules out people switching to PT due to  
> confounders such as simultaneous improvement in route and frequency
>     > rationalisation or TDM measures like congestion charging.
>     >
>     > Cheers
>     >
>     > Adhiraj
>     >